Music Modernization Act Notices of License, Notices of Nonblanket Activity, Data Collection and Delivery Efforts, and Reports of Usage and Payment, 12822-12827 [2021-04573]
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12822
Federal Register / Vol. 86, No. 42 / Friday, March 5, 2021 / Rules and Regulations
Okeechobee Waterway, mile 28.2, at
Indiantown, Florida. The bridge owner
requested to start the three hour
advance notice for an opening earlier
each evening and end it one hour later
each morning. This deviation will test a
change to the drawbridge operation
schedule to determine whether a
permanent change to the schedule is
needed. The Coast Guard is seeking
comments from the public regarding
these proposed changes.
DATES: This deviation is effective
without actual notice from March 5,
2021 through 11:59 p.m. on August 27,
2021. For the purposes of enforcement,
actual notice will be used from 1 a.m.
on March 1, 2021 until March 5, 2021.
Comments and related material must
reach the Coast Guard on or before April
29, 2021.
ADDRESSES: You may submit comments
identified by docket number USCG–
2021–0099 using Federal eRulemaking
Portal at https://www.regulations.gov.
See the ‘‘Public Participation and
Request for Comments’’ portion of the
SUPPLEMENTARY INFORMATION section
below for instructions on submitting
comments.
If
you have questions on this test
deviation, call or email L.T. Samuel
Rodriguez-Gonzalez, U.S. Coast Guard,
Sector Miami Waterways Management
Division; telephone 305–535–4307,
email Samuel.Rodriguez-Gonzalez@
uscg.mil.
FOR FURTHER INFORMATION CONTACT:
SUPPLEMENTARY INFORMATION:
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I. Background, Purpose, and Legal
Basis
The Seaboard System Railroad Bridge
across the Okeechobee Waterway, mile
28.2, at Indiantown, Florida is a swing
bridge with a seven foot vertical
clearance at mean high water in the
closed position. The normal operating
schedule for the bridge is set forth in 33
CFR 117.317(e). Navigation on the
waterway is commercial and
recreational.
The bridge owner, CSX
Transportation, requested that vessels
provide a three hour advance
notification for a bridge opening during
the evening and overnight hours. The
three hour advance notification would
align with the operating schedule of the
U.S. Army Corps of Engineers (USACE)
Locks along this portion of the
Okeechobee Waterway. After reviewing
the draw tender logs, the Coast Guard
determined that allowing the bridge to
change the start and end times for the
advance notice may meet the reasonable
needs of navigation.
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Under this test deviation, the draw
shall open on signal, except that from 7
p.m. to 7 a.m. the draw shall open if at
least a three hour advance notice is
given. Advance openings can be
arranged by contacting CSX
Transportation at 1–850–209–9528.
The Coast Guard will also inform the
users of the waterways through our
Local and Broadcast Notices to Mariners
of the change in operating schedule for
the bridge so that vessel operators can
arrange their transits to minimize any
impact caused by the temporary
deviation.
In accordance with 33 CFR 117.35(e),
the drawbridge must return to its regular
operating schedule immediately at the
end of the effective period of this
temporary deviation. This deviation
from the operating regulations is
authorized under 33 CFR 117.35.
II. Public Participation and Request for
Comments
We view public participation as
essential to effective rulemaking, and
will consider all comments and material
received during the comment period.
Your comment can help shape the
outcome of this rulemaking. If you
submit a comment, please include the
docket number for this rulemaking,
indicate the specific section of this
document to which each comment
applies, and provide a reason for each
suggestion or recommendation.
We encourage you to submit
comments through the Federal
eRulemaking Portal at https://
www.regulations.gov. If your material
cannot be submitted using https://
www.regulations.gov, contact the person
in the FOR FURTHER INFORMATION
CONTACT section of this document for
alternate instructions.
We accept anonymous comments. All
comments received will be posted
without change to https://
www.regulations.gov and will include
any personal information you have
provided. For more about privacy and
submissions in response to this
document, see DHS’s eRulemaking
System of Records notice (85 FR 14226,
March 11, 2020).
Documents mentioned in this test
deviation as being available in this
docket and all public comments, will be
in our online docket at https://
www.regulations.gov and can be viewed
by following that website’s instructions.
Additionally, if you go to the online
docket and sign up for email alerts, you
will be notified when comments are
posted or a final rule is published.
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Dated: February 25, 2021.
Randall D. Overton,
Director, Bridge Administration, Seventh
Coast Guard District.
[FR Doc. 2021–04552 Filed 3–4–21; 8:45 am]
BILLING CODE 9110–04–P
LIBRARY OF CONGRESS
U.S. Copyright Office
37 CFR Part 210
[Docket No. 2020–5]
Music Modernization Act Notices of
License, Notices of Nonblanket
Activity, Data Collection and Delivery
Efforts, and Reports of Usage and
Payment
U.S. Copyright Office, Library
of Congress.
ACTION: Supplemental interim rule.
AGENCY:
The U.S. Copyright Office is
amending its regulations governing
certain reporting requirements of digital
music providers and significant
nonblanket licensees pursuant to title I
of the Orrin G. Hatch-Bob Goodlatte
Music Modernization Act. This
amendment adjusts provisions
concerning the reporting of information
about permanent download passthrough licenses in light of recent
requests for accommodations to avoid
potential market disruption.
DATES: Effective April 5, 2021.
FOR FURTHER INFORMATION CONTACT:
Regan A. Smith, General Counsel and
Associate Register of Copyrights, by
email at regans@copyright.gov, Jason E.
Sloan, Assistant General Counsel, by
email at jslo@copyright.gov, or
Cassandra G. Sciortino, AttorneyAdvisor, by email at csciortino@
copyright.gov. Each can be contacted by
telephone at (202) 707–8350.
SUPPLEMENTARY INFORMATION:
SUMMARY:
I. Background
On October 11, 2018, the President
signed into law the Orrin G. Hatch-Bob
Goodlatte Music Modernization Act
(‘‘MMA’’) which, among other things,
substantially modifies the compulsory
‘‘mechanical’’ license for making and
distributing phonorecords of
nondramatic musical works under 17
U.S.C. 115.1 It does so by switching
from a song-by-song licensing system to
a blanket licensing regime that became
available on January 1, 2021 (the
‘‘license availability date’’),
administered by a mechanical licensing
1 Public
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Law 115–264, 132 Stat. 3676 (2018).
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collective (‘‘MLC’’) designated by the
Copyright Office (the ‘‘Office’’). Digital
music providers (‘‘DMPs’’) are able to
obtain the new compulsory blanket
license to make digital phonorecord
deliveries (‘‘DPDs’’) of musical works,
including in the form of permanent
downloads, limited downloads, or
interactive streams (referred to in the
statute as ‘‘covered activity’’ where such
activity qualifies for a compulsory
license), subject to compliance with
various requirements, including
reporting obligations.2 DMPs may also
continue to engage in those activities
solely through voluntary, or direct,
licensing with copyright owners, in
which case the DMP may be considered
a significant nonblanket licensee
(‘‘SNBL’’) under the statute, subject to
separate reporting obligations.
On September 17, 2020, the Office
issued an interim rule adopting
regulations concerning certain types of
reporting required under the statute
after the license availability date:
notices of license and reports of usage
by DMPs, and notices of nonblanket
activity and reports of usage by SNBLs
(the ‘‘September 2020 rule’’).3 Those
interim regulations include
requirements to report certain
information about certain permanent
download licenses.4 They were adopted
to help ensure that the MLC receives
sufficient information to be able to
fulfill its statutory obligations, including
under section 115(d)(3)(G)(i)(I)(bb), and
to effectuate the reporting requirements
of section 115(d)(4)(A)(ii)(II).
After the adoption of these rules,
which involved multiple rounds of
public comments through a notification
of inquiry,5 notice of proposed
rulemaking,6 and an ex parte
communications process,7 the DLC
raised a new concern with respect to the
applicability of these particular
reporting provisions to ‘‘pass-through’’
licenses for permanent downloads.8 The
DLC explained that ‘‘all [DMPs
operating] download stores operate
exclusively under so-called ‘passthrough’ licenses received from record
labels, where the label obtains the
mechanical licenses from musical work
copyright owners and then authorizes
downstream distributors to make and
distribute permanent downloads.’’ 9 The
Office notes that this focus on
permanent downloads reflects that the
scope of ‘‘pass-through’’ licensing under
section 115 was diminished under the
MMA, which eliminated the ability of
record labels to ‘‘pass-through’’ section
115 licenses for streaming or limited
downloads.10
The underlying mechanical license
pursuant to which the DMP has been
given authority for permanent
downloads by a record label can be
either compulsory or voluntary. Under
the MMA, the compulsory version is
defined as an ‘‘individual download
license,’’ which is ‘‘a compulsory
license obtained by a record company to
make and distribute, or authorize the
making and distribution of, permanent
downloads embodying a specific
individual musical work.’’ 11 The noncompulsory version (a ‘‘voluntary passthrough license’’) does not appear to be
directly addressed by the MMA, but in
general the MMA provides for
preexisting voluntary licenses to remain
in effect after the blanket license
availability date.12
The DLC raised the concern that the
relevant reporting requirements set forth
in the September 2020 rule require
DMPs and SNBLs operating under the
authority of pass-through licenses to
report certain information about such
licenses, including identification and
contact information for relevant musical
8 See
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2 As
permitted under the MMA, the Office
designated a digital licensee coordinator (‘‘DLC’’) to
represent licensees in proceedings before the
Copyright Royalty Judges (‘‘CRJs’’) and the Office,
to serve as a non-voting member of the MLC, and
to carry out other functions. 17 U.S.C. 115(d)(5)(B);
84 FR 32274 (July 8, 2019); see also 17 U.S.C.
115(d)(3)(D)(i)(IV), (d)(5)(C).
3 85 FR 58114 (Sept. 17, 2020).
4 37 CFR 210.24(b)(8), 210.25(b)(6), 210.27(c)(5),
210.28(c)(5).
5 84 FR 49966 (Sept. 24, 2019).
6 85 FR 22518 (Apr. 22, 2020).
7 Guidelines for ex parte communications, along
with records of such communications, including
those referenced herein, are available at https://
www.copyright.gov/rulemaking/mmaimplementation/ex-parte-communications.html. All
rulemaking activity, including public comments, as
well as educational material regarding the Music
Modernization Act, can currently be accessed via
navigation from https://www.copyright.gov/musicmodernization/.
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DLC Ex Parte Letter at 4–7 (Nov. 10, 2020).
at 4.
10 See H.R. Rep. No. 115–651, at 4 (2018)
(‘‘Subsection (b)(3) maintains the ‘pass-through’
license for record labels to obtain and pass through
mechanical license rights for individual permanent
downloads. Under the Music Modernization Act, a
record label will no longer be eligible to obtain and
pass through a Section 115 license to a digital
music provider to engage in activities related to
interactive streams or limited downloads.’’); S. Rep.
No. 115–339, at 4 (2018); Report and Section-bySection Analysis of H.R. 1551 by the Chairmen and
Ranking Members of Senate and House Judiciary
Committees, at 3 (2018), https://www.copyright.gov/
legislation/mma/_conference_report.pdf
(‘‘Conf.Rep.’’); U.S. Copyright Office, Copyright and
the Music Marketplace at 27–28 (2015), https://
www.copyright.gov/policy/musiclicensingstudy/
copyright-and-the-music-marketplace.pdf
(describing previous pass-through licensing
practices).
11 17 U.S.C. 115(e)(12).
12 See id. at 115(d)(9)(C).
9 Id.
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12823
work copyright owners, that they do not
have.13 The DLC stated that:
This information is not provided by record
labels to download stores through existing
reporting mechanisms . . . and for this to
occur would require record labels and digital
music providers to invest resources to build
entirely new systems. The reality is that
services are not likely to make those
investments, especially because purchases of
permanent downloads, while still significant,
are declining. It is far more likely that
download stores would simply cease
operations.14
The DLC submitted proposed regulatory
amendments to address their concerns,
to which the MLC did not object.15 The
MLC and DLC agreed that ‘‘allowing the
existing rules to go into effect without
alteration would cause market
disruption for permanent download
offerings.’’ 16
In response, on December 28, 2020,
the Office issued a supplemental
interim rule with request for comments
(the ‘‘December 2020 rule’’).17 In the
December 2020 rule, the Office
tentatively agreed that the issue needed
to be addressed and noticed the matter
for public comment. It adjusted the
September 2020 rule, effective
immediately, to prevent the potential
market disruption that the MLC and
DLC were concerned about while the
Office solicited comments and
continued to consider how best to
proceed with respect to the issue.
Specifically, the December 2020 rule
created a temporary exception to the
previously adopted reporting
requirements with respect to individual
download licenses and voluntary passthrough licenses, such that the failure to
report information about these licenses
will not otherwise impact a DMP’s or
SNBL’s compliance with their various
requirements under the MMA and the
Office’s related regulations (e.g., the
MLC cannot use the failure to provide
that particular information as a basis to
reject an otherwise compliant notice of
license or serve a notice of default on an
otherwise compliant blanket licensee).
The December 2020 rule further
provided that after the temporary
exception is no longer in effect, the MLC
can take action against a DMP or SNBL
who benefitted from the exception if
any amended reporting requirements
adopted by the Office are not complied
with by the DMP or SNBL within 45
days after their effective date (or an
alternate date subsequently adopted by
13 DLC
Ex Parte Letter at 4–6 (Nov. 10, 2020).
at 5–6.
15 DLC & MLC Ex Parte Letter at 4, add. B (Dec.
9, 2020).
16 Id. at 4.
17 85 FR 84243 (Dec. 28, 2020).
14 Id.
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the Office, whichever is later). The MLC
and DLC indicated that neither of them
opposed the Office employing this
approach.18
With respect to the DLC’s concerns,
the Office solicited comments on the
DLC’s proposal, which would exempt
individual download licenses and
voluntary pass-through licenses from
the relevant reporting requirements
under the September 2020 rule, and
would instead impose alternative
requirements that the DLC views as
more appropriate and feasible for DMPs
to comply with in light of the
information they typically receive from
record labels, but that still ensure that
the MLC has sufficient information to
fulfill its statutory duties. The Office
specifically sought comments regarding
its authority to adopt the DLC’s
proposal, and invited comments more
generally on how to address, or whether
the Office should address, the passthrough license issue, including
whether a different approach should be
taken.
The Office received responsive
comments from the DLC, MLC, and the
Alliance for Recorded Music (‘‘ARM’’),
all agreeing that the issue should be
addressed, that the DLC’s proposed
solution should be adopted, and that the
Office has the authority to do so.19
Having reviewed and considered all
relevant comments in the record, the
Office concludes that it is necessary and
appropriate under its authority pursuant
to 17 U.S.C. 115 and 702 to further
adjust the current interim rule to
address the concerns that have been
raised.20 The Office further finds the
DLC’s unopposed proposal to be a
reasonable approach that is within the
Office’s authority to adopt; thus, it is
being implemented with only minor
modifications, discussed below.
II. Supplemental Interim Rule
The DLC’s comments reiterate the
concerns it previously raised:
The existing reporting regulations require
permanent download services operating
under the authority of ‘voluntary passthrough licenses’ to report information that
they do not know—in particular, the identity
and contact information for copyright owners
of the musical works embodied in sound
recordings. That is because musical work
copyright owners issue voluntary pass18 DLC
& MLC Ex Parte Letter at 4 (Dec. 9, 2020).
DLC Supplemental Interim Rule Comment
at 1–4; MLC Supplemental Interim Rule Comment
at 2–4; ARM Supplemental Interim Rule Comment
at 1–3.
20 See 17 U.S.C. 702, 115(d)(4)(A)(ii)(III),
115(d)(12)(A); see also H.R. Rep. No. 115–651, at
5–6, 14; S. Rep. No. 115–339, at 5, 15; Conf. Rep.
at 4, 12; Nat’l Cable & Telecomms. Ass’n v. Brand
X internet Servs., 545 U.S. 967, 980 (2005).
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19 See
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through licenses not to digital services, but
to record labels, on the understanding that
they will pass through the authority to make
and distribute permanent downloads to
downstream services. Record labels do pass
on this authority but do not today report such
identity and contact information to services
through existing data feeds. Given that
permanent downloads represent a
diminishing (even if still significant) share of
the market, labels and services will probably
not invest in those reporting systems.21
ARM confirms that ‘‘[d]ownload
stores . . . are still a significant
contributor to the recorded music
industry’s revenues,’’ contributing
‘‘nearly $1 billion (i.e., $856 million) in
annual revenues’’ as of 2019.22 ARM
seconds the DLC’s assertions that
‘‘[a]bsent a change in the interim rule to
address this problem, ‘download stores
would simply cease operations’ rather
than investing the resources to build
entirely new systems to collect and
report the necessary information,’’
adding that ‘‘[g]iven the revenue figures
cited above, any such decision by the
operators of download stores would be
extremely damaging to artists and labels
alike.’’ 23 The MLC also ‘‘understands
that the market for permanent
downloads faces significant disruption
if DMPs operating download stores
under pass-through mechanical licenses
are required to identify and provide
contact information for each respective
musical work copyright owner in order
to have those pass-through licenses
recognized by the MLC and carved out
from the blanket license.’’ 24 The Office
agrees that the relevant reporting
requirements adopted by the September
2020 rule should be adjusted in light of
this additional information to avoid any
such potential harm or disruption to the
permanent download market, especially
given that the MLC does not object that
doing so may impede its ability to
properly administer the blanket license.
The September 2020 rule required
DMPs and SNBLs to report certain
information about applicable voluntary
licenses and individual download
licenses, including the identity and
contact information for the musical
work copyright owners for works
subject to such licenses.25 The DLC’s
proposed solution is to exempt pass21 DLC Supplemental Interim Rule Comment at 1;
see ARM Supplemental Interim Rule Comment at
2 n.1 (‘‘Under this arrangement, it is the record
labels—not the download stores—that are
responsible for providing reports of use to the
musical work copyright owners.’’).
22 ARM Supplemental Interim Rule Comment at
1.
23 Id. at 2 (quoting DLC & MLC Ex Parte Letter
at 4 (Dec. 9, 2020)).
24 MLC Supplemental Interim Rule Comment at 2.
25 37 CFR 210.24(b)(8), 210.25(b)(6), 210.27(c)(5),
210.28(c)(5).
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through licenses—both individual
download licenses and voluntary passthrough licenses—from these reporting
requirements, and instead impose
alternative reporting requirements
pursuant to which DMPs and SNBLs
must either indicate reliance on passthrough licenses for all of their
permanent downloads or provide a list
of all sound recordings covered by passthrough licenses, or provide a list of any
applicable catalog exclusions where it is
indicated that authority otherwise exists
for all permanent downloads.26 The
MLC does not oppose this proposal and
states that ‘‘[w]ith respect to the
practical viability of the DLC Proposal,
the MLC believes that it can effectively
and efficiently administer the blanket
license with the reporting adjustments
in the proposal.’’ 27
This proposal strikes the Office as
reasonable in light of the concerns
raised following the adoption of the
September 2020 rule and the MLC’s
statements that the proposed alternative
information to be reported will be
sufficient for it to effectively and
efficiently administer the blanket
license. The remaining question is
whether the Office has the authority
under the MMA to adopt the proposal.
In the notice soliciting comments that
accompanied the December 2020 rule,
the Office said that in particular, the
Office seeks comments regarding its
authority to adopt the DLC’s proposal in
light of 17 U.S.C. 115(d)(4)(A)(ii)(II),
which requires DMPs to ‘‘identify and
provide contact information for all
musical work copyright owners for
works embodied in sound recordings as
to which a voluntary license, rather than
the blanket license, is in effect with
respect to the uses being reported.’’ 28
The Office said that while the DLC
argues that the statute is ‘‘at least . . .
ambiguous’’ and that the Office can
‘‘exercise its general regulatory
authority to clarify this issue,’’ the
Office is cautious about potentially
concluding that the term ‘‘voluntary
license’’ in that provision excludes
voluntary pass-through licenses, and
thus seeks further comments to aid its
statutory analysis.29 The Office said that
relatedly, it seeks comments as to
whether there are any concerns, as a
matter of statutory interpretation, with
26 DLC & MLC Ex Parte Letter at 4, add. B at
2–4, 7, 10, 28–29 (Dec. 9, 2020); see DLC
Supplemental Interim Rule Comment at 1; MLC
Supplemental Interim Rule Comment at 2 (stating
that this would ‘‘continue the industry practice of
identifying pass-through licenses by reference to the
sound recordings’’).
27 MLC Supplemental Interim Rule Comment at 3.
28 85 FR at 84244.
29 Id.
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interpreting the term ‘‘voluntary
license’’ in section 115(d)(4)(A)(ii)(II) in
the manner the DLC requests while
reading the same term more broadly
elsewhere in section 115, such as in the
introductory paragraph of section
115(d)(4)(A)(ii).30 In response, the DLC
and ARM put forward several legal
arguments supporting the Office’s
authority.31 While the Office does not
necessarily agree on every point
asserted, the Office ultimately concurs
that the DLC’s proposal is not contrary
to the statute and that the Office has the
authority to adopt it (and that as a
matter of policy, it is appropriate to do
so in light of the unanimous public
comments in support of the proposal).
Specifically, the Office has analyzed
the interrelationships among sections
115(d)(3)(G)(i)(I)(bb), 115(d)(4)(A)(ii),
115(d)(4)(A)(ii)(I)(bb), and
115(d)(4)(A)(ii)(II), which address the
MLC’s obligations and DMP reporting
requirements with respect to voluntary
licenses and individual download
licenses.32 Under section
115(d)(3)(G)(i)(I)(bb), the MLC has a
duty to ‘‘confirm uses of musical works
subject to voluntary licenses and
individual download licenses, and the
corresponding pro rata amounts to be
deducted from royalties that would
otherwise be due under the blanket
license.’’ 33 And pursuant to the
introductory paragraph of section
115(d)(4)(A)(ii), DMPs, in reporting to
the MLC, must ‘‘provide usage data for
musical works used under the blanket
license and usage data for musical
works used in covered activities under
voluntary licenses and individual
download licenses.’’ 34 But under
section 115(d)(4)(A)(ii)(II) (one of
multiple subparts providing further
specificity under this introductory
paragraph), DMPs are required to report
musical work copyright owner identity
and contact information only for ‘‘works
embodied in sound recordings as to
which a voluntary license, rather than
the blanket license, is in effect with
respect to the uses being reported.’’ 35
Individual download licenses are
conspicuously absent from this subpart,
although the introductory paragraph of
section 115(d)(4)(A)(ii) requires
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30 Id.
31 DLC Supplemental Interim Rule Comment at
2–4; ARM Supplemental Interim Rule Comment at
2–3.
32 While the first two provisions expressly refer
to both voluntary licenses and individual download
licenses, the third does not explicitly refer to either,
and the fourth only mentions voluntary licenses.
33 17 U.S.C. 115(d)(3)(G)(i)(I)(bb) (emphasis
added).
34 Id. at 115(d)(4)(A)(ii) (emphasis added).
35 Id. at 115(d)(4)(A)(ii)(II).
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reporting of usage data under these
licenses and the MLC must receive at
least some sort of information about
these licenses in order to be able to
carry out its obligations under section
115(d)(3)(G)(i)(I)(bb). This suggests the
Office should specify the information
required to be reported with respect to
individual download licenses pursuant
to section 115(d)(4)(A)(ii)(III), which
requires DMPs to ‘‘provide such other
information as the Register of
Copyrights shall require by
regulation,’’ 36 in addition to the Office’s
general authority under section
115(d)(12)(A).
With respect to section
115(d)(4)(A)(ii)(II)’s usage of the phrase
‘‘voluntary license,’’ when read against
these other provisions and the overall
licensing framework, the Office believes
this phrase is best read as referring only
to voluntary licenses that DMPs have
entered into directly with musical work
copyright owners (or their agents),
leaving a reporting gap for voluntary
pass-through licenses for which the
Office should detail requirements by
regulation. By requiring identity and
contact information for the relevant
musical work copyright owners and
omitting reference to individual
download licenses, the provision
implies a direct relationship between
DMPs and the musical work copyright
owners that does not exist with passthrough licenses. As the DLC notes, not
only do DMPs not have this
information, they often do not even
know if the relevant pass-through
licenses are voluntary or compulsory
because that license belongs to the
record label.37 If Congress had meant for
this provision to cover voluntary passthrough licenses, it would have likely
included a reference to individual
download licenses as well; there does
not seem to be any reason to distinguish
between them for reporting purposes.38
36 See
id. at 115(d)(4)(A)(ii)(III).
Ex Parte Letter at 5 (Nov. 10, 2020)
(‘‘[D]ownload stores are not even aware when a
label is relying on a compulsory license and when
it is relying on a voluntary variant thereof. Nor have
they ever received contact information for musical
work copyright owners from record labels.’’); DLC
Supplemental Interim Rule Comment at 3 (‘‘[I]t
would be unusual for a service to have contact
information for a musical work copyright owner
with whom it has no direct contractual
relationship.’’).
38 In adopting the September 2020 rule, and in the
absence of any contrary comments at that time, the
Office had read the provision as inadvertently
omitting individual download licenses, and so
adopted regulations requiring reporting of copyright
owner identity and contact information for both
voluntary licenses and individual download
licenses. See 37 CFR 210.24(b)(8), 210.25(b)(6),
210.27(c)(5), 210.28(c)(5). While that interpretation
is also reasonable, in light of the DLC’s postissuance comments about that approach, the Office
37 DLC
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12825
If the provision were read to include
voluntary pass-through licenses, DMPs
would have to obtain the relevant
information from the sound recording
copyright owners or licensors that have
the direct relationship with the musical
work copyright owners, but nothing in
the statute compels them to provide
such information to DMPs. Such a
requirement would also be in tension
with section 115(d)(4)(A)(ii)(I)(bb),
which requires DMPs to report musical
work copyright owner information for
the musical works embodied in reported
sound recordings only ‘‘to the extent
acquired by the digital music provider
in the metadata provided by sound
recording copyright owners or other
licensors of sound recordings in
connection with the use of sound
recordings of musical works to engage
in covered activities.’’ 39
Additionally, the MMA’s definition of
‘‘voluntary license’’ is very broad: ‘‘A
license for use of a musical work (or
share thereof) other than a compulsory
license obtained under this section.’’ 40
Especially given that this definition is
not even limited to covered activities,
examining the context of the provision
in which the term appears is critical.
Here, as the foregoing shows, it is clear
from reading the whole of section
115(d)(4)(A)(ii) together in context that
section 115(d)(4)(A)(ii)(II) is meant to be
referring to voluntary licenses for
covered activities that are not passthrough licenses. This is in contrast, for
example, to the introductory paragraph
of section 115(d)(4)(A)(ii) where it is
obviously meant to more broadly refer
to both direct voluntary licenses and
voluntary pass-through licenses.
This result is consistent with
Congress’s expressed intent to
‘‘maintain[ ] the ‘pass-through’ license
for record labels to obtain and pass
through mechanical license rights for
individual permanent downloads.’’ 41
Reading the statute in a way that
frustrates the continuation of download
stores or pass-through licensing for
permanent downloads would be
contrary to Congress’s wishes.
Accordingly, the Office has adopted
the proposal with a minor modification.
The Office is omitting the qualifying
phrase ‘‘where such authority applies to
the exclusion of the blanket license
authority pursuant to 17 U.S.C.
now finds it more persuasive that the omission of
individual download licenses was intentional, and
that, instead, this provision simply did not specify
that it was not intended to apply to voluntary passthrough licenses.
39 See 17 U.S.C. 115(d)(4)(A)(ii)(I)(bb).
40 Id. at 115(e)(36).
41 See H.R. Rep. No. 115–651, at 4; S. Rep. No.
115–339, at 4; Conf. Rep. at 3.
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115(d)(1)(C)(i)’’ from each place where it
appears in the proposal.42 The DLC
characterized the language as ‘‘simply
reiterat[ing] the principle expressed in
section 115(d)(1)(C)(i),’’ and the MLC
said it ‘‘sees this language to be in the
nature of ‘for the avoidance of doubt’
language.’’ 43 The MLC explained that
the reason for the language is ‘‘so that
DMPs understand clearly that where
they identify pass-through licenses at
the sound recording level, then their
blanket license coverage is also
excluded at the sound recording
level.’’ 44 The MLC noted that ‘‘if the
Office was to clarify that operation of
voluntary license identification
elsewhere, then the queried language
would be less important.’’ 45
In light of these points, the proposed
language appears to be unnecessary. It
also seems somewhat ambiguous, and
could potentially be construed as
suggesting that there may be types of
voluntary licenses authorizing DMPs to
make and distribute permanent
downloads that do not apply to the
exclusion of the blanket license, which
the MLC and DLC state is not the
intention of the language.46 To clarify,
as the MLC requests, the Office accepts
the common sense reading of section
115(d)(1)(C)(i) that musical works (or
shares thereof) are only excluded from
the blanket license to the extent ‘‘a
voluntary license or individual
download license applies.’’ 47 In other
words, the scope of the exclusion from
the blanket license corresponds to the
scope of the alternative license
authority. For example, a pass-through
license for making permanent
downloads of a particular sound
recording of a musical work would only
exclude the musical work as embodied
in that specific sound recording and
used in that specific DPD configuration;
it would not exclude the musical work
as embodied in other sound recordings
or as used in other DPD configurations
(like interactive streams) that are not
part of that pass-through license
authority (which could be separately
excluded by other licenses).
The DLC’s proposal also included a
provision that ‘‘explicitly acknowledges
that the MLC may report to copyright
owners regarding usage of their musical
works that a DMP identified as covered
42 See DLC & MLC Ex Parte Letter add. B at 2,
3, 10 (Dec. 9, 2020).
43 DLC Supplemental Interim Rule Comment at 5;
MLC Supplemental Interim Rule Comment at 2.
44 MLC Supplemental Interim Rule Comment at 2.
45 Id. at 3.
46 See DLC Supplemental Interim Rule Comment
at 5; MLC Supplemental Interim Rule Comment at
2.
47 See 17 U.S.C. 115(d)(1)(C)(i).
VerDate Sep<11>2014
15:52 Mar 04, 2021
Jkt 253001
by pass-through licenses.’’ 48 The MLC
explains that it ‘‘believes that it can
substantially advance transparency’’ by
doing this, as it would ‘‘for the first time
in the industry, give copyright owners
an independent record of download
store usage that copyright owners can
use to verify their royalty accountings
from record labels for mechanical
licenses that were passed through to
DMPs.’’ 49 The rule includes this
unopposed provision, as it further
serves the transparency aims of the
MMA.
In addition to adopting the modified
DLC proposal, this supplemental
interim rule updates the December 2020
rule by providing that the temporary
reporting exception the Office had
adopted while it noticed this topic for
public comment and considered the
issue more thoroughly shall be retired as
of the effective date of the new
provisions now being adopted.
Beneficiaries of the temporary exception
are reminded that in order to retain the
protection of the exception, they must
comply with the new supplemental
interim rule by reporting the required
information to the MLC within 45 days
after the rule’s effective date.
List of Subjects in 37 CFR Part 210
Copyright, Phonorecords, Recordings.
Interim Regulations
PART 210—COMPULSORY LICENSE
FOR MAKING AND DISTRIBUTING
PHYSICAL AND DIGITAL
PHONORECORDS OF NONDRAMATIC
MUSICAL WORKS
1. The authority citation for part 210
continues to read as follows:
■
Authority: 17 U.S.C. 115, 702.
2. Amend § 210.24 as follows:
a. Remove ‘‘or individual download
license’’ each place it appears;
■ b. In paragraph (b)(8) introductory
text, add a sentence after the second
sentence; and
■ c. Add paragraph (b)(9).
The additions read as follows:
■
■
Notices of blanket license.
*
*
*
*
*
(b) * * *
(8) * * * This paragraph (b)(8) does
not apply to any authority obtained by
a digital music provider from licensors
48 MLC Supplemental Interim Rule Comment at 3;
DLC & MLC Ex Parte Letter add. B at 17 (Dec. 9,
2020).
49 MLC Supplemental Interim Rule Comment at 3.
PO 00000
Frm 00028
Fmt 4700
3. Amend § 210.25 by revising
paragraph (b)(6) to read as follows:
■
§ 210.25
For the reasons set forth in the
preamble, the Copyright Office amends
37 CFR part 210 as follows:
§ 210.24
of sound recordings to make and
distribute permanent downloads of
musical works embodied in such sound
recordings pursuant to an individual
download license or voluntary license.
* * *
*
*
*
*
*
(9) A description of the extent to
which the digital music provider is
operating under authority obtained from
licensors of sound recordings to make
and distribute permanent downloads of
musical works embodied in such sound
recordings pursuant to an individual
download license or voluntary license.
Such description may indicate that such
authority exists for all permanent
downloads. Otherwise, such description
shall include a list of all sound
recordings for which the digital music
provider has obtained such authority
from the respective sound recording
licensors, or a list of any applicable
catalog exclusions where the digital
music provider indicates that such
authority otherwise exists for all
permanent downloads. Such description
shall also include an identification of
the digital music provider’s covered
activities operated under such authority.
*
*
*
*
*
Sfmt 4700
Notices of nonblanket activity.
*
*
*
*
*
(b) * * *
(6) Acknowledgement of whether the
significant nonblanket licensee is
operating under authority obtained from
licensors of sound recordings to make
and distribute permanent downloads of
musical works embodied in such sound
recordings pursuant to an individual
download license or voluntary license.
Where such authority does not cover all
permanent downloads made available
on the service, the significant
nonblanket licensee shall maintain with
the mechanical licensing collective a list
of all sound recordings for which it has
obtained such authority from the
respective sound recording licensors, or
a list of any applicable catalog
exclusions where the significant
nonblanket licensee indicates that such
authority otherwise exists for all
permanent downloads.
*
*
*
*
*
4. Amend § 210.27 as follows:
■ a. Revise paragraph (c)(5); and
■ b. In paragraph (g)(2)(ii), add a
sentence at the end of the paragraph.
The revision and addition read as
follows:
■
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Federal Register / Vol. 86, No. 42 / Friday, March 5, 2021 / Rules and Regulations
§ 210.27 Reports of usage and payment for
blanket licensees.
§ 210.28 Reports of usage for significant
nonblanket licensees.
*
*
*
*
*
*
(c) * * *
(5)(i) For any voluntary license in
effect during the applicable monthly
reporting period, the information
required under § 210.24(b)(8). If this
information has been separately
provided to the mechanical licensing
collective, it need not be contained in
the monthly report of usage, provided
the report states that the information has
been provided separately and includes
the date on which such information was
last provided to the mechanical
licensing collective. This paragraph
(c)(5)(i) does not apply to any authority
obtained by a digital music provider
from licensors of sound recordings to
make and distribute permanent
downloads of musical works embodied
in such sound recordings pursuant to an
individual download license or
voluntary license.
(ii) For any authority obtained by a
digital music provider from licensors of
sound recordings to make and distribute
permanent downloads of musical works
embodied in such sound recordings
pursuant to an individual download
license or voluntary license, and where
such authority does not cover all
permanent downloads made available
on the service, a list of all sound
recordings for which the digital music
provider has obtained such authority
from the respective sound recording
licensors, or a list of any applicable
catalog exclusions where the digital
music provider indicates that such
authority otherwise exists for all
permanent downloads, and an
identification of the digital music
provider’s covered activities operated
under such authority. If this information
has been separately provided to the
mechanical licensing collective, it need
not be contained in the monthly report
of usage, provided the report states that
the information has been provided
separately and includes the date on
which such information was last
provided to the mechanical licensing
collective.
*
*
*
*
*
(g) * * *
(2) * * *
(ii) * * * These efforts may include
providing copyright owners with
information on usage of their respective
musical works that was identified by a
digital music provider as subject to a
voluntary license or individual
download license.
*
*
*
*
*
■ 5. Amend § 210.28 by revising
paragraph (c)(5) to read as follows:
VerDate Sep<11>2014
15:52 Mar 04, 2021
Jkt 253001
*
*
*
*
(c) * * *
(5)(i) For each voluntary license in
effect during the applicable monthly
reporting period, the information
required under § 210.24(b)(8). If this
information has been separately
provided to the mechanical licensing
collective, it need not be contained in
the monthly report of usage, provided
the report states that the information has
been provided separately and includes
the date on which such information was
last provided to the mechanical
licensing collective. This paragraph
(c)(5)(i) does not apply to any authority
obtained by a significant nonblanket
licensee from licensors of sound
recordings to make and distribute
permanent downloads of musical works
embodied in such sound recordings
pursuant to an individual download
license or voluntary license.
(ii) For any authority obtained by a
significant nonblanket licensee from
licensors of sound recordings to make
and distribute permanent downloads of
musical works embodied in such sound
recordings pursuant to an individual
download license or voluntary license,
and where such authority does not
cover all permanent downloads made
available on the service, a list of all
sound recordings for which the
significant nonblanket licensee has
obtained such authority from the
respective sound recording licensors, or
a list of any applicable catalog
exclusions where the significant
nonblanket licensee indicates that such
authority otherwise exists for all
permanent downloads, and
identification of the significant
nonblanket licensee’s covered activities
operated under such authority. If this
information has been separately
provided to the mechanical licensing
collective, it need not be contained in
the monthly report of usage, provided
the report states that the information has
been provided separately and includes
the date on which such information was
last provided to the mechanical
licensing collective.
*
*
*
*
*
■ 6. Amend § 210.30 as follows:
■ a. Revise paragraph (a);
■ b. Remove paragraph (b); and
■ c. Redesignate paragraph (c) as
paragraph (b).
The revision reads as follows:
§ 210.30 Temporary exception to certain
reporting requirements about certain
permanent download licenses.
(a) Where a requirement of
§ 210.24(b)(8), § 210.25(b)(6),
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Frm 00029
Fmt 4700
Sfmt 4700
12827
§ 210.27(c)(5), or § 210.28(c)(5) has not
been satisfied with respect to an
individual download license or
voluntary pass-through license before
April 5, 2021, in connection with a
submission to the mechanical licensing
collective before such date, a submitter
may take additional time to comply
with such reporting obligations, as
amended, by no later than May 19,
2021. Taking such additional time shall
not render an otherwise compliant
notice of license, notice of nonblanket
activity, or report of usage invalid, or
provide a basis for the mechanical
licensing collective to reject an
otherwise compliant notice of license,
serve a notice of default on an otherwise
compliant blanket licensee, terminate an
otherwise compliant blanket license, or
engage in legal enforcement efforts
against an otherwise compliant
significant nonblanket licensee. Any
deadline otherwise applicable to any
such action by the mechanical licensing
collective shall be tolled with respect to
a submitter permitted to take additional
time to comply with these reporting
obligations until May 19, 2021.
*
*
*
*
*
Dated: February 23, 2021.
Shira Perlmutter,
Register of Copyrights and Director of the
U.S. Copyright Office.
Approved by:
Carla D. Hayden,
Librarian of Congress.
[FR Doc. 2021–04573 Filed 3–4–21; 8:45 am]
BILLING CODE 1410–30–P
ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Part 52
[EPA–R09–OAR–2021–0134; FRL–10020–
94–Region 9]
Determination To Defer Sanctions;
Arizona; Pinal County Air Quality
Control District
Environmental Protection
Agency (EPA).
ACTION: Interim final determination.
AGENCY:
The Environmental Protection
Agency (EPA) is making an interim final
determination that the Arizona
Department of Environmental Quality
(ADEQ) has submitted rules and other
materials on behalf of the Pinal County
Air Quality Control District (PCAQCD or
District) that correct deficiencies in its
Clean Air Act (CAA or Act) state
implementation plan (SIP) provisions
concerning ozone nonattainment
requirements. This determination is
SUMMARY:
E:\FR\FM\05MRR1.SGM
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Agencies
- Library of Congress
- U.S. Copyright Office
[Federal Register Volume 86, Number 42 (Friday, March 5, 2021)]
[Rules and Regulations]
[Pages 12822-12827]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-04573]
=======================================================================
-----------------------------------------------------------------------
LIBRARY OF CONGRESS
U.S. Copyright Office
37 CFR Part 210
[Docket No. 2020-5]
Music Modernization Act Notices of License, Notices of Nonblanket
Activity, Data Collection and Delivery Efforts, and Reports of Usage
and Payment
AGENCY: U.S. Copyright Office, Library of Congress.
ACTION: Supplemental interim rule.
-----------------------------------------------------------------------
SUMMARY: The U.S. Copyright Office is amending its regulations
governing certain reporting requirements of digital music providers and
significant nonblanket licensees pursuant to title I of the Orrin G.
Hatch-Bob Goodlatte Music Modernization Act. This amendment adjusts
provisions concerning the reporting of information about permanent
download pass-through licenses in light of recent requests for
accommodations to avoid potential market disruption.
DATES: Effective April 5, 2021.
FOR FURTHER INFORMATION CONTACT: Regan A. Smith, General Counsel and
Associate Register of Copyrights, by email at [email protected],
Jason E. Sloan, Assistant General Counsel, by email at
[email protected], or Cassandra G. Sciortino, Attorney-Advisor, by
email at [email protected]. Each can be contacted by telephone
at (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'') which, among
other things, substantially modifies the compulsory ``mechanical''
license for making and distributing phonorecords of nondramatic musical
works under 17 U.S.C. 115.\1\ It does so by switching from a song-by-
song licensing system to a blanket licensing regime that became
available on January 1, 2021 (the ``license availability date''),
administered by a mechanical licensing
[[Page 12823]]
collective (``MLC'') designated by the Copyright Office (the
``Office''). Digital music providers (``DMPs'') are able to obtain the
new compulsory blanket license to make digital phonorecord deliveries
(``DPDs'') of musical works, including in the form of permanent
downloads, limited downloads, or interactive streams (referred to in
the statute as ``covered activity'' where such activity qualifies for a
compulsory license), subject to compliance with various requirements,
including reporting obligations.\2\ DMPs may also continue to engage in
those activities solely through voluntary, or direct, licensing with
copyright owners, in which case the DMP may be considered a significant
nonblanket licensee (``SNBL'') under the statute, subject to separate
reporting obligations.
---------------------------------------------------------------------------
\1\ Public Law 115-264, 132 Stat. 3676 (2018).
\2\ As permitted under the MMA, the Office designated a digital
licensee coordinator (``DLC'') to represent licensees in proceedings
before the Copyright Royalty Judges (``CRJs'') and the Office, to
serve as a non-voting member of the MLC, and to carry out other
functions. 17 U.S.C. 115(d)(5)(B); 84 FR 32274 (July 8, 2019); see
also 17 U.S.C. 115(d)(3)(D)(i)(IV), (d)(5)(C).
---------------------------------------------------------------------------
On September 17, 2020, the Office issued an interim rule adopting
regulations concerning certain types of reporting required under the
statute after the license availability date: notices of license and
reports of usage by DMPs, and notices of nonblanket activity and
reports of usage by SNBLs (the ``September 2020 rule'').\3\ Those
interim regulations include requirements to report certain information
about certain permanent download licenses.\4\ They were adopted to help
ensure that the MLC receives sufficient information to be able to
fulfill its statutory obligations, including under section
115(d)(3)(G)(i)(I)(bb), and to effectuate the reporting requirements of
section 115(d)(4)(A)(ii)(II).
---------------------------------------------------------------------------
\3\ 85 FR 58114 (Sept. 17, 2020).
\4\ 37 CFR 210.24(b)(8), 210.25(b)(6), 210.27(c)(5),
210.28(c)(5).
---------------------------------------------------------------------------
After the adoption of these rules, which involved multiple rounds
of public comments through a notification of inquiry,\5\ notice of
proposed rulemaking,\6\ and an ex parte communications process,\7\ the
DLC raised a new concern with respect to the applicability of these
particular reporting provisions to ``pass-through'' licenses for
permanent downloads.\8\ The DLC explained that ``all [DMPs operating]
download stores operate exclusively under so-called `pass-through'
licenses received from record labels, where the label obtains the
mechanical licenses from musical work copyright owners and then
authorizes downstream distributors to make and distribute permanent
downloads.'' \9\ The Office notes that this focus on permanent
downloads reflects that the scope of ``pass-through'' licensing under
section 115 was diminished under the MMA, which eliminated the ability
of record labels to ``pass-through'' section 115 licenses for streaming
or limited downloads.\10\
---------------------------------------------------------------------------
\5\ 84 FR 49966 (Sept. 24, 2019).
\6\ 85 FR 22518 (Apr. 22, 2020).
\7\ Guidelines for ex parte communications, along with records
of such communications, including those referenced herein, are
available at https://www.copyright.gov/rulemaking/mma-implementation/ex-parte-communications.html. All rulemaking
activity, including public comments, as well as educational material
regarding the Music Modernization Act, can currently be accessed via
navigation from https://www.copyright.gov/music-modernization/.
\8\ See DLC Ex Parte Letter at 4-7 (Nov. 10, 2020).
\9\ Id. at 4.
\10\ See H.R. Rep. No. 115-651, at 4 (2018) (``Subsection (b)(3)
maintains the `pass-through' license for record labels to obtain and
pass through mechanical license rights for individual permanent
downloads. Under the Music Modernization Act, a record label will no
longer be eligible to obtain and pass through a Section 115 license
to a digital music provider to engage in activities related to
interactive streams or limited downloads.''); S. Rep. No. 115-339,
at 4 (2018); Report and Section-by-Section Analysis of H.R. 1551 by
the Chairmen and Ranking Members of Senate and House Judiciary
Committees, at 3 (2018), https://www.copyright.gov/legislation/mma/_conference_report.pdf (``Conf.Rep.''); U.S. Copyright Office,
Copyright and the Music Marketplace at 27-28 (2015), https://www.copyright.gov/policy/musiclicensingstudy/copyright-and-the-music-marketplace.pdf (describing previous pass-through licensing
practices).
---------------------------------------------------------------------------
The underlying mechanical license pursuant to which the DMP has
been given authority for permanent downloads by a record label can be
either compulsory or voluntary. Under the MMA, the compulsory version
is defined as an ``individual download license,'' which is ``a
compulsory license obtained by a record company to make and distribute,
or authorize the making and distribution of, permanent downloads
embodying a specific individual musical work.'' \11\ The non-compulsory
version (a ``voluntary pass-through license'') does not appear to be
directly addressed by the MMA, but in general the MMA provides for
preexisting voluntary licenses to remain in effect after the blanket
license availability date.\12\
---------------------------------------------------------------------------
\11\ 17 U.S.C. 115(e)(12).
\12\ See id. at 115(d)(9)(C).
---------------------------------------------------------------------------
The DLC raised the concern that the relevant reporting requirements
set forth in the September 2020 rule require DMPs and SNBLs operating
under the authority of pass-through licenses to report certain
information about such licenses, including identification and contact
information for relevant musical work copyright owners, that they do
not have.\13\ The DLC stated that:
---------------------------------------------------------------------------
\13\ DLC Ex Parte Letter at 4-6 (Nov. 10, 2020).
This information is not provided by record labels to download
stores through existing reporting mechanisms . . . and for this to
occur would require record labels and digital music providers to
invest resources to build entirely new systems. The reality is that
services are not likely to make those investments, especially
because purchases of permanent downloads, while still significant,
are declining. It is far more likely that download stores would
simply cease operations.\14\
---------------------------------------------------------------------------
\14\ Id. at 5-6.
The DLC submitted proposed regulatory amendments to address their
concerns, to which the MLC did not object.\15\ The MLC and DLC agreed
that ``allowing the existing rules to go into effect without alteration
would cause market disruption for permanent download offerings.'' \16\
---------------------------------------------------------------------------
\15\ DLC & MLC Ex Parte Letter at 4, add. B (Dec. 9, 2020).
\16\ Id. at 4.
---------------------------------------------------------------------------
In response, on December 28, 2020, the Office issued a supplemental
interim rule with request for comments (the ``December 2020
rule'').\17\ In the December 2020 rule, the Office tentatively agreed
that the issue needed to be addressed and noticed the matter for public
comment. It adjusted the September 2020 rule, effective immediately, to
prevent the potential market disruption that the MLC and DLC were
concerned about while the Office solicited comments and continued to
consider how best to proceed with respect to the issue. Specifically,
the December 2020 rule created a temporary exception to the previously
adopted reporting requirements with respect to individual download
licenses and voluntary pass-through licenses, such that the failure to
report information about these licenses will not otherwise impact a
DMP's or SNBL's compliance with their various requirements under the
MMA and the Office's related regulations (e.g., the MLC cannot use the
failure to provide that particular information as a basis to reject an
otherwise compliant notice of license or serve a notice of default on
an otherwise compliant blanket licensee). The December 2020 rule
further provided that after the temporary exception is no longer in
effect, the MLC can take action against a DMP or SNBL who benefitted
from the exception if any amended reporting requirements adopted by the
Office are not complied with by the DMP or SNBL within 45 days after
their effective date (or an alternate date subsequently adopted by
[[Page 12824]]
the Office, whichever is later). The MLC and DLC indicated that neither
of them opposed the Office employing this approach.\18\
---------------------------------------------------------------------------
\17\ 85 FR 84243 (Dec. 28, 2020).
\18\ DLC & MLC Ex Parte Letter at 4 (Dec. 9, 2020).
---------------------------------------------------------------------------
With respect to the DLC's concerns, the Office solicited comments
on the DLC's proposal, which would exempt individual download licenses
and voluntary pass-through licenses from the relevant reporting
requirements under the September 2020 rule, and would instead impose
alternative requirements that the DLC views as more appropriate and
feasible for DMPs to comply with in light of the information they
typically receive from record labels, but that still ensure that the
MLC has sufficient information to fulfill its statutory duties. The
Office specifically sought comments regarding its authority to adopt
the DLC's proposal, and invited comments more generally on how to
address, or whether the Office should address, the pass-through license
issue, including whether a different approach should be taken.
The Office received responsive comments from the DLC, MLC, and the
Alliance for Recorded Music (``ARM''), all agreeing that the issue
should be addressed, that the DLC's proposed solution should be
adopted, and that the Office has the authority to do so.\19\ Having
reviewed and considered all relevant comments in the record, the Office
concludes that it is necessary and appropriate under its authority
pursuant to 17 U.S.C. 115 and 702 to further adjust the current interim
rule to address the concerns that have been raised.\20\ The Office
further finds the DLC's unopposed proposal to be a reasonable approach
that is within the Office's authority to adopt; thus, it is being
implemented with only minor modifications, discussed below.
---------------------------------------------------------------------------
\19\ See DLC Supplemental Interim Rule Comment at 1-4; MLC
Supplemental Interim Rule Comment at 2-4; ARM Supplemental Interim
Rule Comment at 1-3.
\20\ See 17 U.S.C. 702, 115(d)(4)(A)(ii)(III), 115(d)(12)(A);
see also H.R. Rep. No. 115-651, at 5-6, 14; S. Rep. No. 115-339, at
5, 15; Conf. Rep. at 4, 12; Nat'l Cable & Telecomms. Ass'n v. Brand
X internet Servs., 545 U.S. 967, 980 (2005).
---------------------------------------------------------------------------
II. Supplemental Interim Rule
The DLC's comments reiterate the concerns it previously raised:
The existing reporting regulations require permanent download
services operating under the authority of `voluntary pass-through
licenses' to report information that they do not know--in
particular, the identity and contact information for copyright
owners of the musical works embodied in sound recordings. That is
because musical work copyright owners issue voluntary pass-through
licenses not to digital services, but to record labels, on the
understanding that they will pass through the authority to make and
distribute permanent downloads to downstream services. Record labels
do pass on this authority but do not today report such identity and
contact information to services through existing data feeds. Given
that permanent downloads represent a diminishing (even if still
significant) share of the market, labels and services will probably
not invest in those reporting systems.\21\
---------------------------------------------------------------------------
\21\ DLC Supplemental Interim Rule Comment at 1; see ARM
Supplemental Interim Rule Comment at 2 n.1 (``Under this
arrangement, it is the record labels--not the download stores--that
are responsible for providing reports of use to the musical work
copyright owners.'').
ARM confirms that ``[d]ownload stores . . . are still a significant
contributor to the recorded music industry's revenues,'' contributing
``nearly $1 billion (i.e., $856 million) in annual revenues'' as of
2019.\22\ ARM seconds the DLC's assertions that ``[a]bsent a change in
the interim rule to address this problem, `download stores would simply
cease operations' rather than investing the resources to build entirely
new systems to collect and report the necessary information,'' adding
that ``[g]iven the revenue figures cited above, any such decision by
the operators of download stores would be extremely damaging to artists
and labels alike.'' \23\ The MLC also ``understands that the market for
permanent downloads faces significant disruption if DMPs operating
download stores under pass-through mechanical licenses are required to
identify and provide contact information for each respective musical
work copyright owner in order to have those pass-through licenses
recognized by the MLC and carved out from the blanket license.'' \24\
The Office agrees that the relevant reporting requirements adopted by
the September 2020 rule should be adjusted in light of this additional
information to avoid any such potential harm or disruption to the
permanent download market, especially given that the MLC does not
object that doing so may impede its ability to properly administer the
blanket license.
---------------------------------------------------------------------------
\22\ ARM Supplemental Interim Rule Comment at 1.
\23\ Id. at 2 (quoting DLC & MLC Ex Parte Letter at 4 (Dec. 9,
2020)).
\24\ MLC Supplemental Interim Rule Comment at 2.
---------------------------------------------------------------------------
The September 2020 rule required DMPs and SNBLs to report certain
information about applicable voluntary licenses and individual download
licenses, including the identity and contact information for the
musical work copyright owners for works subject to such licenses.\25\
The DLC's proposed solution is to exempt pass-through licenses--both
individual download licenses and voluntary pass-through licenses--from
these reporting requirements, and instead impose alternative reporting
requirements pursuant to which DMPs and SNBLs must either indicate
reliance on pass-through licenses for all of their permanent downloads
or provide a list of all sound recordings covered by pass-through
licenses, or provide a list of any applicable catalog exclusions where
it is indicated that authority otherwise exists for all permanent
downloads.\26\ The MLC does not oppose this proposal and states that
``[w]ith respect to the practical viability of the DLC Proposal, the
MLC believes that it can effectively and efficiently administer the
blanket license with the reporting adjustments in the proposal.'' \27\
---------------------------------------------------------------------------
\25\ 37 CFR 210.24(b)(8), 210.25(b)(6), 210.27(c)(5),
210.28(c)(5).
\26\ DLC & MLC Ex Parte Letter at 4, add. B at 2-4, 7, 10, 28-29
(Dec. 9, 2020); see DLC Supplemental Interim Rule Comment at 1; MLC
Supplemental Interim Rule Comment at 2 (stating that this would
``continue the industry practice of identifying pass-through
licenses by reference to the sound recordings'').
\27\ MLC Supplemental Interim Rule Comment at 3.
---------------------------------------------------------------------------
This proposal strikes the Office as reasonable in light of the
concerns raised following the adoption of the September 2020 rule and
the MLC's statements that the proposed alternative information to be
reported will be sufficient for it to effectively and efficiently
administer the blanket license. The remaining question is whether the
Office has the authority under the MMA to adopt the proposal. In the
notice soliciting comments that accompanied the December 2020 rule, the
Office said that in particular, the Office seeks comments regarding its
authority to adopt the DLC's proposal in light of 17 U.S.C.
115(d)(4)(A)(ii)(II), which requires DMPs to ``identify and provide
contact information for all musical work copyright owners for works
embodied in sound recordings as to which a voluntary license, rather
than the blanket license, is in effect with respect to the uses being
reported.'' \28\ The Office said that while the DLC argues that the
statute is ``at least . . . ambiguous'' and that the Office can
``exercise its general regulatory authority to clarify this issue,''
the Office is cautious about potentially concluding that the term
``voluntary license'' in that provision excludes voluntary pass-through
licenses, and thus seeks further comments to aid its statutory
analysis.\29\ The Office said that relatedly, it seeks comments as to
whether there are any concerns, as a matter of statutory
interpretation, with
[[Page 12825]]
interpreting the term ``voluntary license'' in section
115(d)(4)(A)(ii)(II) in the manner the DLC requests while reading the
same term more broadly elsewhere in section 115, such as in the
introductory paragraph of section 115(d)(4)(A)(ii).\30\ In response,
the DLC and ARM put forward several legal arguments supporting the
Office's authority.\31\ While the Office does not necessarily agree on
every point asserted, the Office ultimately concurs that the DLC's
proposal is not contrary to the statute and that the Office has the
authority to adopt it (and that as a matter of policy, it is
appropriate to do so in light of the unanimous public comments in
support of the proposal).
---------------------------------------------------------------------------
\28\ 85 FR at 84244.
\29\ Id.
\30\ Id.
\31\ DLC Supplemental Interim Rule Comment at 2-4; ARM
Supplemental Interim Rule Comment at 2-3.
---------------------------------------------------------------------------
Specifically, the Office has analyzed the interrelationships among
sections 115(d)(3)(G)(i)(I)(bb), 115(d)(4)(A)(ii),
115(d)(4)(A)(ii)(I)(bb), and 115(d)(4)(A)(ii)(II), which address the
MLC's obligations and DMP reporting requirements with respect to
voluntary licenses and individual download licenses.\32\ Under section
115(d)(3)(G)(i)(I)(bb), the MLC has a duty to ``confirm uses of musical
works subject to voluntary licenses and individual download licenses,
and the corresponding pro rata amounts to be deducted from royalties
that would otherwise be due under the blanket license.'' \33\ And
pursuant to the introductory paragraph of section 115(d)(4)(A)(ii),
DMPs, in reporting to the MLC, must ``provide usage data for musical
works used under the blanket license and usage data for musical works
used in covered activities under voluntary licenses and individual
download licenses.'' \34\ But under section 115(d)(4)(A)(ii)(II) (one
of multiple subparts providing further specificity under this
introductory paragraph), DMPs are required to report musical work
copyright owner identity and contact information only for ``works
embodied in sound recordings as to which a voluntary license, rather
than the blanket license, is in effect with respect to the uses being
reported.'' \35\ Individual download licenses are conspicuously absent
from this subpart, although the introductory paragraph of section
115(d)(4)(A)(ii) requires reporting of usage data under these licenses
and the MLC must receive at least some sort of information about these
licenses in order to be able to carry out its obligations under section
115(d)(3)(G)(i)(I)(bb). This suggests the Office should specify the
information required to be reported with respect to individual download
licenses pursuant to section 115(d)(4)(A)(ii)(III), which requires DMPs
to ``provide such other information as the Register of Copyrights shall
require by regulation,'' \36\ in addition to the Office's general
authority under section 115(d)(12)(A).
---------------------------------------------------------------------------
\32\ While the first two provisions expressly refer to both
voluntary licenses and individual download licenses, the third does
not explicitly refer to either, and the fourth only mentions
voluntary licenses.
\33\ 17 U.S.C. 115(d)(3)(G)(i)(I)(bb) (emphasis added).
\34\ Id. at 115(d)(4)(A)(ii) (emphasis added).
\35\ Id. at 115(d)(4)(A)(ii)(II).
\36\ See id. at 115(d)(4)(A)(ii)(III).
---------------------------------------------------------------------------
With respect to section 115(d)(4)(A)(ii)(II)'s usage of the phrase
``voluntary license,'' when read against these other provisions and the
overall licensing framework, the Office believes this phrase is best
read as referring only to voluntary licenses that DMPs have entered
into directly with musical work copyright owners (or their agents),
leaving a reporting gap for voluntary pass-through licenses for which
the Office should detail requirements by regulation. By requiring
identity and contact information for the relevant musical work
copyright owners and omitting reference to individual download
licenses, the provision implies a direct relationship between DMPs and
the musical work copyright owners that does not exist with pass-through
licenses. As the DLC notes, not only do DMPs not have this information,
they often do not even know if the relevant pass-through licenses are
voluntary or compulsory because that license belongs to the record
label.\37\ If Congress had meant for this provision to cover voluntary
pass-through licenses, it would have likely included a reference to
individual download licenses as well; there does not seem to be any
reason to distinguish between them for reporting purposes.\38\
---------------------------------------------------------------------------
\37\ DLC Ex Parte Letter at 5 (Nov. 10, 2020) (``[D]ownload
stores are not even aware when a label is relying on a compulsory
license and when it is relying on a voluntary variant thereof. Nor
have they ever received contact information for musical work
copyright owners from record labels.''); DLC Supplemental Interim
Rule Comment at 3 (``[I]t would be unusual for a service to have
contact information for a musical work copyright owner with whom it
has no direct contractual relationship.'').
\38\ In adopting the September 2020 rule, and in the absence of
any contrary comments at that time, the Office had read the
provision as inadvertently omitting individual download licenses,
and so adopted regulations requiring reporting of copyright owner
identity and contact information for both voluntary licenses and
individual download licenses. See 37 CFR 210.24(b)(8), 210.25(b)(6),
210.27(c)(5), 210.28(c)(5). While that interpretation is also
reasonable, in light of the DLC's post-issuance comments about that
approach, the Office now finds it more persuasive that the omission
of individual download licenses was intentional, and that, instead,
this provision simply did not specify that it was not intended to
apply to voluntary pass-through licenses.
---------------------------------------------------------------------------
If the provision were read to include voluntary pass-through
licenses, DMPs would have to obtain the relevant information from the
sound recording copyright owners or licensors that have the direct
relationship with the musical work copyright owners, but nothing in the
statute compels them to provide such information to DMPs. Such a
requirement would also be in tension with section
115(d)(4)(A)(ii)(I)(bb), which requires DMPs to report musical work
copyright owner information for the musical works embodied in reported
sound recordings only ``to the extent acquired by the digital music
provider in the metadata provided by sound recording copyright owners
or other licensors of sound recordings in connection with the use of
sound recordings of musical works to engage in covered activities.''
\39\
---------------------------------------------------------------------------
\39\ See 17 U.S.C. 115(d)(4)(A)(ii)(I)(bb).
---------------------------------------------------------------------------
Additionally, the MMA's definition of ``voluntary license'' is very
broad: ``A license for use of a musical work (or share thereof) other
than a compulsory license obtained under this section.'' \40\
Especially given that this definition is not even limited to covered
activities, examining the context of the provision in which the term
appears is critical. Here, as the foregoing shows, it is clear from
reading the whole of section 115(d)(4)(A)(ii) together in context that
section 115(d)(4)(A)(ii)(II) is meant to be referring to voluntary
licenses for covered activities that are not pass-through licenses.
This is in contrast, for example, to the introductory paragraph of
section 115(d)(4)(A)(ii) where it is obviously meant to more broadly
refer to both direct voluntary licenses and voluntary pass-through
licenses.
---------------------------------------------------------------------------
\40\ Id. at 115(e)(36).
---------------------------------------------------------------------------
This result is consistent with Congress's expressed intent to
``maintain[ ] the `pass-through' license for record labels to obtain
and pass through mechanical license rights for individual permanent
downloads.'' \41\ Reading the statute in a way that frustrates the
continuation of download stores or pass-through licensing for permanent
downloads would be contrary to Congress's wishes.
---------------------------------------------------------------------------
\41\ See H.R. Rep. No. 115-651, at 4; S. Rep. No. 115-339, at 4;
Conf. Rep. at 3.
---------------------------------------------------------------------------
Accordingly, the Office has adopted the proposal with a minor
modification. The Office is omitting the qualifying phrase ``where such
authority applies to the exclusion of the blanket license authority
pursuant to 17 U.S.C.
[[Page 12826]]
115(d)(1)(C)(i)'' from each place where it appears in the proposal.\42\
The DLC characterized the language as ``simply reiterat[ing] the
principle expressed in section 115(d)(1)(C)(i),'' and the MLC said it
``sees this language to be in the nature of `for the avoidance of
doubt' language.'' \43\ The MLC explained that the reason for the
language is ``so that DMPs understand clearly that where they identify
pass-through licenses at the sound recording level, then their blanket
license coverage is also excluded at the sound recording level.'' \44\
The MLC noted that ``if the Office was to clarify that operation of
voluntary license identification elsewhere, then the queried language
would be less important.'' \45\
---------------------------------------------------------------------------
\42\ See DLC & MLC Ex Parte Letter add. B at 2, 3, 10 (Dec. 9,
2020).
\43\ DLC Supplemental Interim Rule Comment at 5; MLC
Supplemental Interim Rule Comment at 2.
\44\ MLC Supplemental Interim Rule Comment at 2.
\45\ Id. at 3.
---------------------------------------------------------------------------
In light of these points, the proposed language appears to be
unnecessary. It also seems somewhat ambiguous, and could potentially be
construed as suggesting that there may be types of voluntary licenses
authorizing DMPs to make and distribute permanent downloads that do not
apply to the exclusion of the blanket license, which the MLC and DLC
state is not the intention of the language.\46\ To clarify, as the MLC
requests, the Office accepts the common sense reading of section
115(d)(1)(C)(i) that musical works (or shares thereof) are only
excluded from the blanket license to the extent ``a voluntary license
or individual download license applies.'' \47\ In other words, the
scope of the exclusion from the blanket license corresponds to the
scope of the alternative license authority. For example, a pass-through
license for making permanent downloads of a particular sound recording
of a musical work would only exclude the musical work as embodied in
that specific sound recording and used in that specific DPD
configuration; it would not exclude the musical work as embodied in
other sound recordings or as used in other DPD configurations (like
interactive streams) that are not part of that pass-through license
authority (which could be separately excluded by other licenses).
---------------------------------------------------------------------------
\46\ See DLC Supplemental Interim Rule Comment at 5; MLC
Supplemental Interim Rule Comment at 2.
\47\ See 17 U.S.C. 115(d)(1)(C)(i).
---------------------------------------------------------------------------
The DLC's proposal also included a provision that ``explicitly
acknowledges that the MLC may report to copyright owners regarding
usage of their musical works that a DMP identified as covered by pass-
through licenses.'' \48\ The MLC explains that it ``believes that it
can substantially advance transparency'' by doing this, as it would
``for the first time in the industry, give copyright owners an
independent record of download store usage that copyright owners can
use to verify their royalty accountings from record labels for
mechanical licenses that were passed through to DMPs.'' \49\ The rule
includes this unopposed provision, as it further serves the
transparency aims of the MMA.
---------------------------------------------------------------------------
\48\ MLC Supplemental Interim Rule Comment at 3; DLC & MLC Ex
Parte Letter add. B at 17 (Dec. 9, 2020).
\49\ MLC Supplemental Interim Rule Comment at 3.
---------------------------------------------------------------------------
In addition to adopting the modified DLC proposal, this
supplemental interim rule updates the December 2020 rule by providing
that the temporary reporting exception the Office had adopted while it
noticed this topic for public comment and considered the issue more
thoroughly shall be retired as of the effective date of the new
provisions now being adopted. Beneficiaries of the temporary exception
are reminded that in order to retain the protection of the exception,
they must comply with the new supplemental interim rule by reporting
the required information to the MLC within 45 days after the rule's
effective date.
List of Subjects in 37 CFR Part 210
Copyright, Phonorecords, Recordings.
Interim Regulations
For the reasons set forth in the preamble, the Copyright Office
amends 37 CFR part 210 as follows:
PART 210--COMPULSORY LICENSE FOR MAKING AND DISTRIBUTING PHYSICAL
AND DIGITAL PHONORECORDS OF NONDRAMATIC MUSICAL WORKS
0
1. The authority citation for part 210 continues to read as follows:
Authority: 17 U.S.C. 115, 702.
0
2. Amend Sec. 210.24 as follows:
0
a. Remove ``or individual download license'' each place it appears;
0
b. In paragraph (b)(8) introductory text, add a sentence after the
second sentence; and
0
c. Add paragraph (b)(9).
The additions read as follows:
Sec. 210.24 Notices of blanket license.
* * * * *
(b) * * *
(8) * * * This paragraph (b)(8) does not apply to any authority
obtained by a digital music provider from licensors of sound recordings
to make and distribute permanent downloads of musical works embodied in
such sound recordings pursuant to an individual download license or
voluntary license. * * *
* * * * *
(9) A description of the extent to which the digital music provider
is operating under authority obtained from licensors of sound
recordings to make and distribute permanent downloads of musical works
embodied in such sound recordings pursuant to an individual download
license or voluntary license. Such description may indicate that such
authority exists for all permanent downloads. Otherwise, such
description shall include a list of all sound recordings for which the
digital music provider has obtained such authority from the respective
sound recording licensors, or a list of any applicable catalog
exclusions where the digital music provider indicates that such
authority otherwise exists for all permanent downloads. Such
description shall also include an identification of the digital music
provider's covered activities operated under such authority.
* * * * *
0
3. Amend Sec. 210.25 by revising paragraph (b)(6) to read as follows:
Sec. 210.25 Notices of nonblanket activity.
* * * * *
(b) * * *
(6) Acknowledgement of whether the significant nonblanket licensee
is operating under authority obtained from licensors of sound
recordings to make and distribute permanent downloads of musical works
embodied in such sound recordings pursuant to an individual download
license or voluntary license. Where such authority does not cover all
permanent downloads made available on the service, the significant
nonblanket licensee shall maintain with the mechanical licensing
collective a list of all sound recordings for which it has obtained
such authority from the respective sound recording licensors, or a list
of any applicable catalog exclusions where the significant nonblanket
licensee indicates that such authority otherwise exists for all
permanent downloads.
* * * * *
0
4. Amend Sec. 210.27 as follows:
0
a. Revise paragraph (c)(5); and
0
b. In paragraph (g)(2)(ii), add a sentence at the end of the paragraph.
The revision and addition read as follows:
[[Page 12827]]
Sec. 210.27 Reports of usage and payment for blanket licensees.
* * * * *
(c) * * *
(5)(i) For any voluntary license in effect during the applicable
monthly reporting period, the information required under Sec.
210.24(b)(8). If this information has been separately provided to the
mechanical licensing collective, it need not be contained in the
monthly report of usage, provided the report states that the
information has been provided separately and includes the date on which
such information was last provided to the mechanical licensing
collective. This paragraph (c)(5)(i) does not apply to any authority
obtained by a digital music provider from licensors of sound recordings
to make and distribute permanent downloads of musical works embodied in
such sound recordings pursuant to an individual download license or
voluntary license.
(ii) For any authority obtained by a digital music provider from
licensors of sound recordings to make and distribute permanent
downloads of musical works embodied in such sound recordings pursuant
to an individual download license or voluntary license, and where such
authority does not cover all permanent downloads made available on the
service, a list of all sound recordings for which the digital music
provider has obtained such authority from the respective sound
recording licensors, or a list of any applicable catalog exclusions
where the digital music provider indicates that such authority
otherwise exists for all permanent downloads, and an identification of
the digital music provider's covered activities operated under such
authority. If this information has been separately provided to the
mechanical licensing collective, it need not be contained in the
monthly report of usage, provided the report states that the
information has been provided separately and includes the date on which
such information was last provided to the mechanical licensing
collective.
* * * * *
(g) * * *
(2) * * *
(ii) * * * These efforts may include providing copyright owners
with information on usage of their respective musical works that was
identified by a digital music provider as subject to a voluntary
license or individual download license.
* * * * *
0
5. Amend Sec. 210.28 by revising paragraph (c)(5) to read as follows:
Sec. 210.28 Reports of usage for significant nonblanket licensees.
* * * * *
(c) * * *
(5)(i) For each voluntary license in effect during the applicable
monthly reporting period, the information required under Sec.
210.24(b)(8). If this information has been separately provided to the
mechanical licensing collective, it need not be contained in the
monthly report of usage, provided the report states that the
information has been provided separately and includes the date on which
such information was last provided to the mechanical licensing
collective. This paragraph (c)(5)(i) does not apply to any authority
obtained by a significant nonblanket licensee from licensors of sound
recordings to make and distribute permanent downloads of musical works
embodied in such sound recordings pursuant to an individual download
license or voluntary license.
(ii) For any authority obtained by a significant nonblanket
licensee from licensors of sound recordings to make and distribute
permanent downloads of musical works embodied in such sound recordings
pursuant to an individual download license or voluntary license, and
where such authority does not cover all permanent downloads made
available on the service, a list of all sound recordings for which the
significant nonblanket licensee has obtained such authority from the
respective sound recording licensors, or a list of any applicable
catalog exclusions where the significant nonblanket licensee indicates
that such authority otherwise exists for all permanent downloads, and
identification of the significant nonblanket licensee's covered
activities operated under such authority. If this information has been
separately provided to the mechanical licensing collective, it need not
be contained in the monthly report of usage, provided the report states
that the information has been provided separately and includes the date
on which such information was last provided to the mechanical licensing
collective.
* * * * *
0
6. Amend Sec. 210.30 as follows:
0
a. Revise paragraph (a);
0
b. Remove paragraph (b); and
0
c. Redesignate paragraph (c) as paragraph (b).
The revision reads as follows:
Sec. 210.30 Temporary exception to certain reporting requirements
about certain permanent download licenses.
(a) Where a requirement of Sec. 210.24(b)(8), Sec. 210.25(b)(6),
Sec. 210.27(c)(5), or Sec. 210.28(c)(5) has not been satisfied with
respect to an individual download license or voluntary pass-through
license before April 5, 2021, in connection with a submission to the
mechanical licensing collective before such date, a submitter may take
additional time to comply with such reporting obligations, as amended,
by no later than May 19, 2021. Taking such additional time shall not
render an otherwise compliant notice of license, notice of nonblanket
activity, or report of usage invalid, or provide a basis for the
mechanical licensing collective to reject an otherwise compliant notice
of license, serve a notice of default on an otherwise compliant blanket
licensee, terminate an otherwise compliant blanket license, or engage
in legal enforcement efforts against an otherwise compliant significant
nonblanket licensee. Any deadline otherwise applicable to any such
action by the mechanical licensing collective shall be tolled with
respect to a submitter permitted to take additional time to comply with
these reporting obligations until May 19, 2021.
* * * * *
Dated: February 23, 2021.
Shira Perlmutter,
Register of Copyrights and Director of the U.S. Copyright Office.
Approved by:
Carla D. Hayden,
Librarian of Congress.
[FR Doc. 2021-04573 Filed 3-4-21; 8:45 am]
BILLING CODE 1410-30-P