Periodic Review of the Designations of the Mechanical Licensing Collective and Digital Licensee Coordinator, 5940-5945 [2024-01781]
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Federal Register / Vol. 89, No. 20 / Tuesday, January 30, 2024 / Notices
whether the information will have
practical utility.
• Evaluate the accuracy of the
agency’s estimate of the burden of the
proposed collection of information,
including the validity of the
methodology and assumptions used.
• Enhance the quality, utility, and
clarity of the information to be
collected; and
• Minimize the burden of the
collection of information on those who
are to respond, including through the
use of appropriate automated,
electronic, mechanical, or other
technological collection techniques or
other forms of information technology,
e.g., permitting electronic submission of
responses.
Agency: DOL—Office of Workers’
Compensation Programs.
Type of Review: Extension.
Title of Collection: Agreement and
Undertaking.
Form: Agreement and Undertaking,
OWCP–1.
OMB Control Number: 1240–0039.
Affected Public: Business or other forprofit.
Estimated Number of Respondents:
20.
Frequency: As requested.
Total Estimated Annual Responses:
20.
Estimated Average Time per
Response: 15 minutes.
Estimated Total Annual Burden
Hours: 5 hours.
Total Estimated Annual Other Cost
Burden: $120.74.
Authority: 44 U.S.C. 3506(c)(2)(A).
Dated: January 24, 2024.
Anjanette Suggs,
Agency Clearance Officer.
[FR Doc. 2024–01757 Filed 1–29–24; 8:45 am]
BILLING CODE 4510–CK–P
I. Statutory Background
LIBRARY OF CONGRESS
Copyright Office
[Docket No. 2024–1]
Periodic Review of the Designations of
the Mechanical Licensing Collective
and Digital Licensee Coordinator
U.S. Copyright Office, Library
of Congress.
ACTION: Notification of inquiry.
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AGENCY:
The U.S. Copyright Office is
issuing a notification of inquiry, as
required by the Music Modernization
Act, regarding whether the existing
designations of the mechanical licensing
collective and digital licensee
coordinator should be continued.
SUMMARY:
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Initial submissions by the
currently designated mechanical
licensing collective and digital licensee
coordinator must be received no later
than 11:59 p.m. Eastern Time on April
1, 2024. Written initial public comments
must be received no later than 11:59
p.m. Eastern Time on May 29, 2024.
Written reply public comments must be
received no later than 11:59 p.m.
Eastern Time on June 28, 2024. Reply
submissions of the currently designated
mechanical licensing collective and
digital licensee coordinator must be
received no later than 11:59 p.m.
Eastern Time on July 29, 2024.
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 public
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/2024. If
electronic submission of comments is
not feasible due to lack of access to a
computer or the internet, please contact
the Office using the contact information
below for special instructions. Initial
and reply submissions by the currently
designated mechanical licensing
collective and digital licensee
coordinator should be made by email to
the Copyright Office’s Assistant to the
General Counsel.
FOR FURTHER INFORMATION CONTACT:
Rhea Efthimiadis, Assistant to the
General Counsel, by email at meft@
copyright.gov or telephone at (202) 707–
8350.
SUPPLEMENTARY INFORMATION:
DATES:
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Law 115–264, 132 Stat. 3676 (2018).
U.S.C. 115(d)(3)(B); see also id. at 115(e)(15).
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A. The MLC’s Designation Criteria
The MMA provides that an entity
wishing to be designated as the MLC
must: (1) be a single nonprofit entity,
not owned by any other entity, created
by copyright owners to carry out its
statutory responsibilities; 7 (2) 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’’; 8 and
(3) possess the administrative and
technological capabilities necessary to
carry out a wide array of responsibilities
associated with administering the
blanket license.9 If no entity meets these
statutory criteria, the Office must
designate an entity as the MLC that most
nearly fits them.10
While the first criterion regarding
nonprofit status is straightforward, the
second and third criteria require more
explanation. As part of the initial MLC
designation proceeding, the Office had
to address the correct construction and
3 Id.
The Orrin G. Hatch–Bob Goodlatte
Music Modernization Act (‘‘MMA’’) 1
created a statutory blanket mechanical
license for the reproduction and
distribution of nondramatic musical
works by digital music providers
(‘‘DMPs’’) in the form of digital
phonorecord deliveries, including
permanent downloads, limited
downloads, and interactive streams (the
‘‘blanket license’’), and eliminated the
song-by-song ‘‘notice of intention’’
process for such uses.
The MMA directed the Copyright
Office (‘‘Office’’) to designate a
mechanical licensing collective
(‘‘MLC’’) to administer the blanket
license 2 and a digital licensee
1 Public
coordinator (‘‘DLC’’) to represent DMPs
in matters related to the administration
of the blanket license. However, if the
Office is unable to identify an entity that
meets the statutory qualifications to
serve as the DLC, it may decline to
designate one.3 As discussed further
below, the Office made its initial MLC
and DLC designations in July 2019.4 At
that time, it designated the entity
‘‘Digital Licensee Coordinator, Inc.’’ as
the DLC and the entity ‘‘Mechanical
Licensing Collective’’ as the MLC.5 The
Office is required to review these
designations every five years, with the
first review to begin in January 2024.6
This notice initiates the review process.
4 37
at 115(d)(3)(D)(i)(IV), (d)(5).
CFR 210.23; 84 FR 32274, 32296 (July 8,
2019).
5 37 CFR 210.23; 84 FR at 32292, 32296. In this
notice, the currently designated digital licensing
coordinator will be designated as the ‘‘Digital
Licensing Coordinator’’ and the statutory digital
licensing coordinator will be designated in
lowercase or by using the abbreviated term, ‘‘the
DLC.’’ Similarly, the currently designated
mechanical licensing collective will be designated
via capitalization (the ‘‘Mechanical Licensing
Collective’’) and the statutory mechanical licensing
collective will be designated in lowercase or by
using the abbreviated term, ‘‘the MLC.’’
6 17 U.S.C. 115(d)(3)(B)(ii) (noting that the review
occurs ‘‘every 5 years, beginning with the fifth full
calendar year to commence after the initial
designation’’); id. at 115(d)(5)(B)(ii) (same).
7 Id. at 115(d)(3)(A)(i).
8 Id. at 115(d)(3)(A)(ii).
9 Id. at 115(d)(3)(A)(iii); see also id. at
115(d)(3)(C)(i)–(iii) (enumerating thirteen functions,
in addition to the ability to administer voluntary
licenses).
10 Id. at 115(d)(3)(B)(iii).
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application of the statute’s endorsement
criterion. The Office sought public input
on this issue.11 After considering the
relevant comments and evaluating the
statute, it concluded that the statute’s
endorsement criterion ‘‘mandates that
the entity designated as the MLC be
endorsed and supported by musical
work copyright owners that together
earned the largest aggregate percentage
(among MLC candidates) of total
royalties from the use of their musical
works in covered activities in the U.S.
during the statutory three-year
period.’’ 12 It further concluded that ‘‘the
endorsement criterion is a plurality
requirement based on market share,
measured by applicable licensing
revenue.’’ 13
The third MLC designation criterion
addresses the administrative and
technological capabilities associated
with carrying out its statutory
responsibilities. Those responsibilities
are executed by the MLC’s board of
directors and task-specific committees.
The MMA provides that the MLC’s
board will consist of 14 voting members
and 3 nonvoting members.14 It also
requires the MLC’s board to establish
three committees: an operations
advisory committee; an unclaimed
royalties oversight committee; and a
dispute resolution committee.15
The MLC’s responsibilities under the
MMA include the following tasks:
• Offering and administering blanket
licenses;
• Collecting and distributing royalties
from DMPs for covered activities;
• Identifying musical works
embodied in sound recordings and
identifying and locating copyright
owners of such musical works; 16
• Establishing and maintaining a
musical works database relevant to
licensing activities under the MMA;
• Administering a process by which
copyright owners can claim ownership
of musical works;
• Investing in relevant resources, and
arranging for services of outside vendors
11 83
FR 65747, 65753 (Dec. 21, 2018).
FR at 32282.
13 Id. For a full discussion of the Office’s
conclusions regarding how the endorsement
criterion is applied, interested parties should
review that portion of the initial designation
determination. Id. at 32280–86.
14 For the statutory requirements regarding the
board described in this paragraph, see 17 U.S.C.
115(d)(3)(D)(i).
15 Id. at 115(d)(3)(D)(iv). Further discussion of the
MLC’s board and committees can be found in the
Office’s initial designation notice. 83 FR at 65748–
50.
16 The statute also mentions ‘‘and shares of such
works’’ when referring to musical works. See, e.g.,
17 U.S.C. 115(d)(3)(C)(i)(III). For brevity’s sake, this
notice will omit references to such shares.
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and others to support the MLC’s
activities; and
• Maintaining records of its activities
and engaging in and responding to
audits.17
The DLC also appoints a
representative to act as a nonvoting
member of the MLC’s board and DMP
representatives to the MLC’s operations
advisory committee.22
B. The DLC’s Designation Criteria,
Authorities, and Functions
Similar to the MLC, the DLC must be
a single nonprofit entity that is endorsed
by and enjoys substantial support from
DMPs, and must possess the
administrative and technological
capabilities necessary to carry out its
responsibilities.18 Unlike the MLC, in
the event the Office is unable to identify
an entity that fulfills the criteria for the
DLC, it may decline to designate one.19
The statute authorizes the DLC to
perform the following functions: (1)
establishing a governance structure,
criteria for membership, and any dues to
be paid by its members; (2) engaging in
activities related to the administrative
assessment, including participating in
administrative assessment proceedings
before the Copyright Royalty Judges and
engaging in efforts to enforce DMPs’
notice and payment obligations related
to the assessment; (3) gathering and
providing documentation for use in
proceedings before the Copyright
Royalty Judges to set the statutory
mechanical license’s rates and terms; (4)
initiating and participating in
proceedings before the Copyright Office
with respect to the blanket license; (5)
maintaining records of its activities; and
(6) assisting in publicizing the MLC’s
existence and functions to copyright
owners.20
Further, under the MMA, the DLC is
required to ‘‘make reasonable, goodfaith efforts’’ to assist the MLC in its
efforts to locate and identify copyright
owners of unmatched musical works by
encouraging DMPs to publicize the
MLC’s existence and the ability of
copyright owners to claim unclaimed
accrued royalties, including by posting
contact information for the collective at
reasonably prominent locations on DMP
websites and applications and
conducting in-person outreach activities
with songwriters.21
II. Regulatory Background
17 Id. at 115(d)(3)(C)(i)(I)–(V), (VII), (XII); see also
id. at 115(d)(3)(C)(i), (iii) (identifying the MLC’s
additional statutory authorities and functions).
18 Id. at 115(d)(3)(C)(i)–(iii) (enumerating thirteen
functions, in addition to the ability to administer
voluntary licenses); see also id. at 115(d)(3)(B)(iii).
19 Id. at 115(d)(5)(B)(iii).
20 Id. at 115(d)(5)(C)(i). The ‘‘administrative
assessment’’ is the fee paid by digital music
providers for the MLC’s costs in establishing,
maintaining, and operating the MLC to fulfill its
statutory functions, excluding any added costs
related to providing services under voluntary
licenses. Id. at 115(d)(7)(D), (e)(3), (e)(6).
21 Id. at 115(d)(5)(C)(i)(VII), (d)(5)(C)(iii).
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A. Initial Designation
For the initial MLC and DLC
designations, the Office published a
notice in the Federal Register soliciting
proposals from parties who wished to be
designated as those entities, and
requested information from those
parties regarding governance,
administrative and technological
capabilities to perform the MMA’s
required functions, and indicia of
endorsement and support.23 The Office
also requested public comments on the
parties’ proposals.24
The Office received one proposal for
designation as the DLC and two
proposals for designation as the MLC. It
received over 600 public comments
responding to the proposals and held
several ex parte meetings addressing
them.25 After considering these
comments and the statutory designation
criteria, the Office concluded that the
entity ‘‘Digital Licensee Coordinator,
Inc.,’’ incorporated in Delaware on
March 20, 2019, ‘‘me[t] each of the
statutory criteria required of the digital
licensee coordinator,’’ and would be
designated as the DLC.26 With respect to
the MLC, the Office concluded that,
while both candidates to become the
MLC ‘‘[met] the statutory criteria to be
a nonprofit created to carry out its
statutory responsibilities,’’ the
Mechanical Licensing Collective ‘‘made
a better showing as to its prospective
administrative and technological
capabilities’’ and was the only
candidate that met the statute’s
‘‘endorsement’’ criteria.27 Therefore, it
designated the entity ‘‘Mechanical
Licensing Collective,’’ incorporated in
Delaware on March 5, 2019, as the
MLC.28
B. The Periodic Designation Review
Process
The MMA requires the Office to
periodically evaluate whether the
existing MLC and DLC designations
22 Id.
23 83
at 115(d)(3)(D)(iv)(II), (i)(IV).
FR 65747.
24 Id.
25 U.S. Copyright Office, Ex Parte
Communications, https://www.copyright.gov/
rulemaking/mma-designations/ex-partecommunications.html (last visited Jan. 24, 2024)
(hosting ex parte meeting summary letters related
to the Office’s initial designations).
26 37 CFR 210.23; 84 FR at 32292, 32296.
27 84 FR at 32276, 32296.
28 37 CFR 210.23; 84 FR at 32296.
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should be continued or, if either
designation is not continued, whether a
different entity should be designated
instead.29 The Office commences this
process by publication of a notice in the
Federal Register by the end of January
in the relevant year.
For the instant review of the MLC and
DLC designations, the Office is first
soliciting information from the currently
designated entities regarding their past
performance and capabilities, as well as
future plans. The responses from the
Mechanical Licensing Collective and the
Digital Licensing Coordinator will be
available for public review. The Office
encourages public comments
concerning whether the existing MLC
and DLC designations should be
continued, or different entities should
be designated. Once the public has
submitted comments, the currently
designated entities will be given an
opportunity to respond. After the time
for submissions from the Mechanical
Licensing Collective, Digital Licensee
Coordinator, and the public have
expired, the Office may also utilize
informal meetings to address discrete
issues prior to issuing a determination.
Any such meetings will occur after
written comments have been submitted
and will follow the Office’s ex parte
meeting guidelines.30
After evaluating the record in this
proceeding, the Office will determine
whether the current MLC and DLC
designations should be continued. If it
concludes that a designation should be
continued, it will publish its
determination in the Federal Register,
ending this proceeding.31 If the Office
decides that either designation should
not be continued, it will solicit
proposals for designation in the Federal
Register. If the Office ultimately
designates a new MLC or DLC, it will
provide the reasons for such a
designation and the designation’s
effective date.32 Further, if it designates
a new MLC, it will ‘‘adopt regulations
to govern the transfer of licenses, funds,
records, data, and administrative
responsibilities from the existing
mechanical licensing collective to the
new entity.’’ 33
29 17
U.S.C. 115(d)(3)(B)(ii); id. at 115(d)(5)(B)(ii).
CFR 205.24. Instructions on how to request
an ex parte meeting are available on the Office’s
website at https://www.copyright.gov/ex-partemeetings/.
31 17 U.S.C. 115(d)(3)(B)(ii)(I); see also id. at
115(d)(5)(B)(ii).
32 Id. at 115(d)(3)(B)(ii)(I); see also id. at
115(d)(5)(B)(ii).
33 Id. at 115(d)(3)(B)(ii)(II).
30 37
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III. Request for Information From the
Current Designees
The Copyright Office seeks
information to assist its review of the
existing MLC and DLC designations and
whether they should be continued. The
questions in this notification of inquiry
are intended to focus the current
designees’ submissions on the statutory
designation criteria and certain areas of
interest to the Office. The parties also
may provide additional information
they wish the Office to consider in
deciding whether to continue the
current designations.
A. Mechanical Licensing CollectiveDirected Inquiries
The Office requests the following
information from the Mechanical
Licensing Collective, organized by the
criteria categories below.
1. Nonprofit Status
The MLC must be a nonprofit entity,
not owned by any other entity, that is
created by copyright owners to carry out
its statutory responsibilities. The Office
requests proof that the Mechanical
Licensing Collective continues to meet
this criterion.
2. Indicia of Endorsement and Support
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.’’ 34 The Office requests
information from the Mechanical
Licensing Collective regarding whether
it continues to satisfy the endorsement
criterion.
3. Administrative and Technological
Capabilities
The MLC must have the
administrative and technological
capabilities to perform its statutorily
required functions.35 The Office
requests a detailed description
explaining how the Mechanical
Licensing Collective has the
administrative and technological
capabilities to perform its required
functions. It asks that the response
address the following subjects:
i. Progress Implementing the
Recommendations in the Office’s
‘‘Unclaimed Royalties’’ Report
The Office requests an update on the
Mechanical Licensing Collective’s
efforts to implement recommendations
34 Id.
35 Id.
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at 115(d)(3)(A)(ii).
at 115(d)(3)(A)(iii).
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contained in the Office’s report
‘‘Unclaimed Royalties: Best Practice
Recommendations for the Mechanical
Licensing Collective,’’ 36 including what
recommendations have been
implemented to date, what efforts are in
progress, its plans to implement
recommendations in the future, and a
discussion of any recommendations it is
not planning to implement, including
the reasons for such decision(s).
ii. Ownership Identification, Matching,
and Claiming Process and Maintenance
of Musical Works Database
The Office requests information about
the Mechanical Licensing Collective’s
ability to identify musical works
embodied in particular sound
recordings, and to identify and locate
the copyright owners of such musical
works, including the following:
(a) Please describe how the
Mechanical Licensing Collective has
worked to improve automated and
manual matching since the blanket
license became available and plans to
further enhance such matching over the
next 5 years, including with respect to
the matching of reported sound
recordings to musical works as well as
the matching of those musical works to
identified and located copyright owners;
(b) Please identify the Mechanical
Licensing Collective’s target goals or
estimates, including any relevant
industry benchmarks, for matching
reported sound recordings to musical
works and identifying and locating
copyright owners over the next five
years, as expressed in terms of (1) a
match rate (i.e., the total amount of
royalties matched to musical works
registered in the Mechanical Licensing
Collective’s database, compared to the
total royalties reported by DMPs); and
(2) a distribution rate (i.e., the total
amount of royalties matched and paid to
the Mechanical Licensing Collective’s
members, compared to the total
royalties reported by DMPs);
(c) Please explain how the Mechanical
Licensing Collective: (1) is using
quantifiable measurements to monitor
its match rate confidence; and (2) tunes
confidence levels without using
numerical metrics; 37
36 U.S. Copyright Office, Unclaimed Royalties:
Best Practice Recommendations for the Mechanical
Licensing Collective (2021) (‘‘Unclaimed Royalties
Report’’), https://www.copyright.gov/policy/
unclaimed-royalties/unclaimed-royalties-finalreport.pdf.
37 See The Mechanical Licensing Collective, 2022
Annual Report 9 (2022), https://www.themlc.com/
hubfs/The%20MLC%202022%20Annual%20
Report.pdf (stating that the Mechanical Licensing
Collective ‘‘does not use numerical metrics to
monitor match rate confidence’’); Designation
Proposal of Mechanical Licensing Collective at 40,
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(d) Please address whether the
Mechanical Licensing Collective has
identified any notable trends or patterns
in reported usage that it has been unable
to match through its efforts to date. If it
has identified such trends or patterns,
please describe what targeted efforts
have been undertaken to date, and are
planned to take place over the next 5
years, to attempt to address these trends
or patterns;
(e) Please describe any efforts the
Mechanical Licensing Collective has
undertaken to enhance database and
claiming portal functionality, including
with respect to searching the database,
sorting and filtering queries, and sharing
and exporting results, as well as specific
plans to develop additional
functionality over the next five years;
(f) Please describe any plans the
Mechanical Licensing Collective’s has to
address disputes and overclaims (or
overlapping claims) via a module within
its portal;
(g) Please describe the Mechanical
Licensing Collective’s efforts to develop
portal access (or a unique portal), or
equivalent database functionalities, for
songwriters who are not selfadministered (e.g., those represented by
a publisher, administrator, or collective
management organization) to permit
them to access, provide, or correct
information about themselves and their
works maintained by the MLC,
including the ability for such
songwriters to flag data issues with their
publisher or other representative, to
provide data directly to the MLC, and to
have permissions-based access to view
information such as stream counts and
revenue associated with their musical
works; 38
(h) Please describe how the
Mechanical Licensing Collective is
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Docket No. 2018–11 (Mar. 21, 2019) (‘‘Mechanical
Licensing Collective Initial Designation Proposal’’),
https://www.gov/comment/COLC-2018-0011-0012
(‘‘Tuning the confidence levels of a matching
system is critical to proper functioning.’’).
38 See Unclaimed Royalties Report at 49–51; The
Mechanical Licensing Collective, Welcome to The
MLC’s Public Work Search, https://
portal.themlc.com/search#work (last visited Jan. 24,
2024) (‘‘Songwriters, Composers & Lyricists: . . .
The MLC is working on additional ways to help you
flag and report data errors to your publisher or
administrator. We hope to launch those later this
year.’’).
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‘‘maintain[ing] at regular intervals
historical records of the information
contained in the public musical works
database, including a record of changes
to such database information and
changes to the source of information in
database fields, in order to allow
tracking of changes to the ownership of
musical works in the database over
time,’’ the length of such ‘‘regular
intervals,’’ and how it has determined
‘‘the most appropriate method for
archiving and maintaining such
historical data to track ownership and
other information changes in the
database’’; 39
(i) The Mechanical Licensing
Collective stated that it would employ
application program interfaces (‘‘APIs’’)
‘‘to allow for bulk submission and
updating of rights data’’ and to
otherwise support data exchange.40
Please describe how the Mechanical
Licensing Collective has employed
systems with APIs to support data
exchange to date 41 and its plans to
implement any additional such systems
over the next five years.
iii. Collection and Distribution of
Royalties, Including Unclaimed
Accrued Royalties
The Office requests information about
the Mechanical Licensing Collective’s
royalty distributions, including the
following topics:
(a) In its initial designation proposal,
the Mechanical Licensing Collective
stated that it ‘‘does not intend to ever
distribute the entirety of unclaimed
royalties simultaneously [and] intends
to implement policies allowing use of
that discretion to retain unclaimed
accrued royalties and continue
matching efforts in situations where
there is reasonable evidence that this
will result in material increases in
matching success.’’ 42 Please address
whether the Mechanical Licensing
39 37
CFR 210.31(f).
Licensing Collective Initial
Designation Proposal at 37, 47.
41 See The Mechanical Licensing Collective, Data
Programs, https://www.themlc.com/dataprograms#
public-search-api (last visited Jan. 24, 2024)
(referencing the beta launch of Mechanical
Licensing Collective’s Public Search API).
42 Mechanical Licensing Collective Initial
Designation Proposal at 52–53.
40 Mechanical
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5943
Collective continues to hold these
views;
(b) Please provide information
regarding: (1) any steps that the
Mechanical Licensing Collective is
taking to protect against the incidence of
fraudulent ownership claims and
frivolous ownership disputes; and (2)
whether these steps have been
successful; and
(c) Please provide information
addressing whether and to what extent
the Mechanical Licensing Collective is
working with DMPs, distributors,
aggregators, or others to protect against
streaming fraud and the status of such
efforts, including their success or
failure.
iv. Investment in Resources and Vendor
Engagement
The Office understands that the
Mechanical Licensing Collective is
relying on third-party vendors,
including The Harry Fox Agency and
ConsenSys, to support its operations
and fulfill its statutory obligations.43 It
is also aware that the Mechanical
Licensing Collective has recently
announced a ‘‘Supplemental Matching
Network,’’ consisting of Blo`kur, Jaxsta,
Pex, Salt and SX Works, to improve its
matching efforts.44 Please provide
additional information about these
relationships, including the specific
functions that they perform, or have
been asked to perform, the vendors’
relevant experience with clients and
projects involving similar scale and
type, or their industry-specific
knowledge. Please provide the same
information with respect to any other
vendors that the Mechanical Licensing
Collective uses, or has plans to use, in
performing its duties.
v. Funding
43 The Mechanical Licensing Collective, 2022
Annual Report 36, 41 (2022), https://www.themlc.
com/hubfs/The%20MLC%202022%20Annual%20
Report.pdf.
44 See Kristin Robinson, The MLC Partners With
5 Data Matching Companies to Increase Royalties
Match Rate, Billboard (Dec. 7, 2023), https://
www.billboard.com/business/publishing/the-mlcimprove-royalties-match-rate-new-data-network1235545949/.
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The statute directs the MLC to
establish procedures to guard against
‘‘abuse, waste, and the unreasonable use
of funds.’’ 45 Review of the MMA’s
legislative history instructs the Office to
consider the Mechanical Licensing
Collective’s efficiency or, conversely,
any ‘‘evidence of fraud, waste, or abuse,
including the failure to follow the
relevant regulations adopted by the
Copyright Office’’ in evaluating whether
the current MLC designation should be
continued.46 Accordingly the Office
requests information about the
Mechanical Licensing Collective’s
procedures to safeguard its use of the
assessment funds against abuse, waste,
and other unreasonable expenditures.47
The Mechanical Licensing Collective
should also provide information
regarding whether it has become more
efficient over time. It should address
with specificity any expenditure
categories (e.g., personnel costs,
information technology, professional
fees, outreach, education,
communication & events, insurance,
rent, computer equipment & office
expenses) that have significantly
increased since January 2021, and a
detailed explanation for the increase.
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vi. Governance
The Office seeks information related
to the Mechanical Licensing Collective’s
governance, including:
(a) A copy of the Mechanical
Licensing Collective’s current bylaws,
including a summary of changes made,
if any, from its initial bylaws;
(b) A list of all the committees the
Mechanical Licensing Collective has
created that are not required by statute,
the membership of those committees,
and how it determined the membership
of those committees;
(c) Copies of all the Mechanical
Licensing Collective’s policies
addressing its statutory duties,
procedures, practices, and guidelines
(e.g., those governing the collection,
processing, holding, and distribution of
royalties, guidelines for adjustments,
member registration, ownership
45 17 U.S.C. 115(d)(3)(D)(ix)(II)(bb)(BB). As noted
above, the DMPs fund the MLC’s operations
through an administrative assessment that is
established by the Copyright Royalty Judges.
46 H.R. Rep. No. 115–651, at 6 (2018).
47 Note that the MMA requires the MLC to retain
a qualified auditor to examine its books, records,
and operations and prepare a report on these topics
for the MLC’s board. 17 U.S.C. 115(d)(3)(D)(ix)(II).
The auditor’s letter to the MLC’s board can be found
on the Mechanical Licensing Collective’s website.
Letter from WithumSmith+Brown, P.C. to the Board
of Directors of the Mechanical Licensing Collective
(Dec. 22, 2023), https://www.themlc.com/hubfs/
Auditor%20Letter%20to%20Board%20re%20
MMA%20Audit%20Provision%20(115(d)(3)(D)
(ix)(II)).pdf.
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disputes, automated and manual
matching, data quality and verification,
investments, conflicts of interest), but
excluding policies unrelated to the
MLC’s statutory duties (e.g., website
terms of use, human resources), the
location of these policies, procedures,
and practices on its website if they are
currently available to the public, and a
summary of changes made, if any, from
earlier versions of these policies,
procedures, practices, and guidelines; 48
(d) The status of any policies or
procedures related to the distribution of
unclaimed accrued royalties and
accrued interest;
(e) An explanation of how the
Mechanical Licensing Collective is
ensuring that: (1) its policies,
procedures, and practices are
transparent and accountable; 49 and (2)
that all board and committee members
have equal access to information in the
Mechanical Licensing Collective’s
possession;
(f) The results of the Mechanical
Licensing Collective’s ‘‘Board Diversity
Report’’ for 2021 and 2023; 50 and
(g) How the Mechanical Licensing
Collective approaches the resolution of
disputes with other interested parties
(e.g., DMPs, songwriters, publishers, or
record labels) regarding interpretation of
the MMA or the Office’s regulations.51
48 To the extent that any of these materials
contain privileged or confidential commercial or
financial information or trade secrets, it should
provide two versions of such documents to the
Office: one redacted copy appropriate for public
viewing and an unredacted copy for the Office. See,
e.g., Five Years Later—The Music Modernization
Act: Hearing Before the Subcomm. on Courts, Intell.
Prop. and the Internet of the H. Comm. on the
Judiciary, 117th Cong. 6 (2023) (responses to
questions for the record of Kris Ahrend, CEO, the
Mechanical Licensing Collective) (‘‘Our financial
advisors have advised that we not make public any
details about specific investment solutions [of the
Mechanical Licensing Collective’s investment
policy]. Their reasons include security concerns
and concerns that such information could be used
alongside our public royalty distribution timelines
to engage in market timing to the detriment of [the
Mechanical Licensing Collective].’’); see also 5
U.S.C. 552(b)(4) (exempting agencies from requiring
disclosures if they involve ‘‘trade secrets and
commercial or financial information obtained from
a person and privileged or confidential’’).
49 See 17 U.S.C. 115(d)(3)(D)(ix)(I)(aa).
50 The Mechanical Licensing Collective’s bylaws
require a biennial ‘‘Board Diversity Report,’’ that
‘‘address[es] the extent to which the Board fully and
fairly represents the whole music publishing and
songwriting communities, and should specifically
note any actual or potential concerns or
shortcomings.’’ It also ‘‘address[es] diversity in such
areas as gender/race/ethnicity, income, musical
genre, geography and expertise/experience.’’ The
Mechanical Licensing Collective, Bylaws of the
Mechanical Licensing Collective sec. 4.8, https://
f.hubspotuserconte.net/hubfs/8718396/files/202005/Bylaws%20of%20The%20MLC.pdf (last visited
Jan. 24, 2024).
51 The Office notes that certain stakeholders
would welcome referring such questions or
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vii. Education and Outreach
The Office requests information
regarding the Mechanical Licensing
Collective’s education and outreach
efforts, including how it reaches diverse
audiences to ‘‘engage in diligent, goodfaith efforts to publicize the collective
and ability to claim unclaimed accrued
royalties for unmatched musical works
(and shares of such works).’’ 52 The
Office is also interested in how the
Mechanical Licensing Collective
‘‘tailor[s] its education and outreach
activities in recognition of the industry’s
broad and diverse spectrum of
songwriters and copyright owners,
including by stakeholders’ varying
levels of sophistication, geographic
location, age, and music genre,’’
including how it ‘‘employ[s] dedicated,
persistent outreach to historically
underserved groups.’’ 53 The Office is
further interested in how the
Mechanical Licensing Collective is
using data in decision-making and
performance measurement, with respect
to its education and outreach efforts, for
example, how it is using data to
evaluate its education and outreach
efforts (e.g., in-person outreach at
events, webinars, advertising,
interviews for articles and podcasts,
partnerships) when considering whether
to participate in an event or activity.
Finally, the Office is interested in how
the Mechanical Licensing Collective is
using ‘‘member demographic statistics
and DMP usage analytics . . . to better
target its education and outreach efforts
towards under-participating groups.’’ 54
The Mechanical Licensing Collective
is encouraged to provide any other
information that it believes is relevant to
demonstrate it continues to meet the
statutory designation criteria.
B. Digital Licensee Coordinator-Directed
Inquiries
The Office requests the following
information from the Digital Licensee
Coordinator relevant to determining
whether its existing designation should
be continued:
1. Nonprofit Status
The Office requests proof that Digital
Licensee Coordinator is a nonprofit
entity, not owned by any other entity,
disputes to the Office. See, e.g., Five Years Later—
The Music Modernization Act: Hearing Before the
Subcomm. on Courts, Intell. Prop. and the Internet
of the H. Comm. on the Judiciary, 117th Cong. 37,
57–58 (2023) (statements of Garrett Levin, President
and CEO, Digital Media Association and Abby
North, President, North Music Group).
52 S. Rep. No. 115–339, at 14 (2018).
53 Unclaimed Royalties Report at 29.
54 Id. at 38.
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that is created to carry out its statutory
responsibilities.55
2. Indicia of Endorsement and Support
The Office requests information from
the Digital Licensee Coordinator
regarding whether it continues to 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.’’ 56
3. Administrative Capabilities and
Governance
The DLC must have the
administrative capabilities to perform
its statutory functions.57 The Office
requests a detailed description of the
Digital Licensee Coordinator’s
administrative capabilities and its
performance of the following functions:
i. Governance
The Office requests a copy of the
Digital Licensee Coordinator’s current
bylaws, including a summary of changes
made, if any, from its initial bylaws. To
the extent not addressed by its bylaws,
the Office also requests a summary of its
governance structure, criteria for
membership, and dues paid by its
members. Lastly, the Office requests a
list of the Digital Licensee Coordinator’s
current members, and a description of
its efforts to grow its membership to
other DMPs, and any challenges related
to such efforts.
ii. Notice and Payment Obligations
The Office requests information
addressing the Digital Licensee
Coordinator’s efforts to enforce notice
and payment obligations with respect to
the administrative assessment,
including: (1) how it is coordinating
such efforts with the Mechanical
Licensing Collective; and (2) the extent
to which it is disclosing information to,
and receiving information from, the
Mechanical Licensing Collective on this
topic.
khammond on DSKJM1Z7X2PROD with NOTICES
iii. Participation in Proceedings Before
the Copyright Office and Copyright
Royalty Judges
The Office requests a summary of the
Digital Licensee Coordinator’s
participation in Office or Copyright
Royalty Judge proceedings, including:
(1) participating in proceedings before
the Copyright Royalty Judges to
55 17
U.S.C. 115(d)(5)(A)(i).
at 115(d)(5)(A)(ii).
57 Id. at 115(d)(5)(A)(iii).
56 Id.
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establish the administrative assessment;
(2) gathering and providing
documentation for use in proceedings
before the Copyright Royalty Judges to
set rates and terms under the
mechanical license; and (3)
participating in proceedings before the
Office with respect to activities
regarding the blanket license.58
iv. Maintaining Records of the Digital
Licensee Coordinator’s Activities
The Office requests a description of
how the Digital Licensee Coordinator is
maintaining records of its activities,
including efforts to ensure that
confidential, private, proprietary, or
privileged information contained in its
records is not improperly disclosed or
used.59
v. Assistance With Publicity for
Unclaimed Royalties
The MMA directs the DLC to ‘‘make
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.’’ 60 The Office requests a
detailed description of the steps that the
Digital Licensee Coordinator has taken
to fulfill this requirement, including
whether all its members have posted the
MLC’s contact information in a
prominent location on their websites
and applications.61 The Office also
requests a summary of the Digital
Licensee Coordinator’s in-person
outreach activities with songwriters.62
The Digital Licensee Coordinator is
encouraged to provide any other
information that it believes is relevant to
demonstrate it continues to meet the
statutory designation criteria.
IV. Public Participation
Interested members of the public are
encouraged to comment on the topics
addressed in the designees’ submissions
or raised by the Office in this
notification of inquiry.63 Commenters
may also address any topics relevant to
this periodic review of the MLC and
DLC designations. Without prejudice to
its review of the current designations,
the Office hopes that this proceeding
will serve as an opportunity for any
58 Id.
at 115(d)(5)(C)(i)(III)–(V).
at 115(d)(5)(C)(i)(VI), (d)(12)(C).
60 See id. at 115(d)(5)(C)(iii).
61 Id. at 115(d)(5)(C)(iii)(I).
62 Id. at 115(d)(5)(C)(iii)(II).
63 Submissions by the Mechanical Licensing
Collective and Digital Licensee Coordinator will be
found on the Office’s website at https://
www.copyright.gov/rulemaking/mma-designations/
2024 approximately sixty days after the publication
of this Notification of Inquiry.
59 Id.
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5945
songwriter, publisher, or DMP who
wishes to express concerns, satisfaction,
or priorities with respect to the
administration of the MMA’s blanket
licensing regime to do so, and that any
designated MLC or DLC will use that
feedback to continually improve its
services.
Dated: January 25, 2024.
Suzanne V. Wilson,
General Counsel and Associate Register of
Copyrights.
[FR Doc. 2024–01781 Filed 1–29–24; 8:45 am]
BILLING CODE 1410–30–P
OFFICE OF MANAGEMENT AND
BUDGET
Request for Information: Privacy
Impact Assessments
Office of Management and
Budget.
ACTION: Request for information.
AGENCY:
Pursuant to the Executive
order on Safe, Secure, and Trustworthy
Development and Use of Artificial
Intelligence, the Office of Management
and Budget (OMB) is requesting public
input on how privacy impact
assessments (PIAs) may be more
effective at mitigating privacy risks,
including those that are further
exacerbated by artificial intelligence
(AI) and other advances in technology
and data capabilities.
DATES: Consideration will be given to
written comments received by April 1,
2024.
ADDRESSES: Please submit comments via
https://www.regulations.gov/ and follow
the instructions for submitting
comments. Public comments are
valuable, and they will inform any
potential updates to relevant OMB
guidance; however, OMB will not
respond to individual submissions.
Privacy Act Statement: OMB is
issuing this request for information
(RFI) pursuant to Executive Order 14110
on Safe, Secure, and Trustworthy
Development and Use of Artificial
Intelligence.1 Submission of comments
in response to this RFI is voluntary.
Comments may be used to inform sound
decision making on topics related to this
RFI, including potential updates to
guidance. Please note that submissions
received in response to this notice may
be posted on https://
www.regulations.gov/ or otherwise
released in their entirety, including any
personal information, business
confidential information, or other
SUMMARY:
1 E.O.
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No. 14110, 88 FR 75191 (Nov. 1, 2023).
30JAN1
]]>Agencies
[Federal Register Volume 89, Number 20 (Tuesday, January 30, 2024)]
[Notices]
[Pages 5940-5945]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-01781]
=======================================================================
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LIBRARY OF CONGRESS
Copyright Office
[Docket No. 2024-1]
Periodic Review of the Designations of the Mechanical Licensing
Collective and Digital Licensee Coordinator
AGENCY: U.S. Copyright Office, Library of Congress.
ACTION: Notification of inquiry.
-----------------------------------------------------------------------
SUMMARY: The U.S. Copyright Office is issuing a notification of
inquiry, as required by the Music Modernization Act, regarding whether
the existing designations of the mechanical licensing collective and
digital licensee coordinator should be continued.
DATES: Initial submissions by the currently designated mechanical
licensing collective and digital licensee coordinator must be received
no later than 11:59 p.m. Eastern Time on April 1, 2024. Written initial
public comments must be received no later than 11:59 p.m. Eastern Time
on May 29, 2024. Written reply public comments must be received no
later than 11:59 p.m. Eastern Time on June 28, 2024. Reply submissions
of the currently designated mechanical licensing collective and digital
licensee coordinator must be received no later than 11:59 p.m. Eastern
Time on July 29, 2024.
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 public 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/2024. If electronic
submission of comments is not feasible due to lack of access to a
computer or the internet, please contact the Office using the contact
information below for special instructions. Initial and reply
submissions by the currently designated mechanical licensing collective
and digital licensee coordinator should be made by email to the
Copyright Office's Assistant to the General Counsel.
FOR FURTHER INFORMATION CONTACT: Rhea Efthimiadis, Assistant to the
General Counsel, by email at [email protected] or telephone at (202)
707-8350.
SUPPLEMENTARY INFORMATION:
I. Statutory Background
The Orrin G. Hatch-Bob Goodlatte Music Modernization Act (``MMA'')
\1\ created a statutory blanket mechanical license for the reproduction
and distribution of nondramatic musical works by digital music
providers (``DMPs'') in the form of digital phonorecord deliveries,
including permanent downloads, limited downloads, and interactive
streams (the ``blanket license''), and eliminated the song-by-song
``notice of intention'' process for such uses.
---------------------------------------------------------------------------
\1\ Public Law 115-264, 132 Stat. 3676 (2018).
---------------------------------------------------------------------------
The MMA directed the Copyright Office (``Office'') to designate a
mechanical licensing collective (``MLC'') to administer the blanket
license \2\ and a digital licensee coordinator (``DLC'') to represent
DMPs in matters related to the administration of the blanket license.
However, if the Office is unable to identify an entity that meets the
statutory qualifications to serve as the DLC, it may decline to
designate one.\3\ As discussed further below, the Office made its
initial MLC and DLC designations in July 2019.\4\ At that time, it
designated the entity ``Digital Licensee Coordinator, Inc.'' as the DLC
and the entity ``Mechanical Licensing Collective'' as the MLC.\5\ The
Office is required to review these designations every five years, with
the first review to begin in January 2024.\6\ This notice initiates the
review process.
---------------------------------------------------------------------------
\2\ 17 U.S.C. 115(d)(3)(B); see also id. at 115(e)(15).
\3\ Id. at 115(d)(3)(D)(i)(IV), (d)(5).
\4\ 37 CFR 210.23; 84 FR 32274, 32296 (July 8, 2019).
\5\ 37 CFR 210.23; 84 FR at 32292, 32296. In this notice, the
currently designated digital licensing coordinator will be
designated as the ``Digital Licensing Coordinator'' and the
statutory digital licensing coordinator will be designated in
lowercase or by using the abbreviated term, ``the DLC.'' Similarly,
the currently designated mechanical licensing collective will be
designated via capitalization (the ``Mechanical Licensing
Collective'') and the statutory mechanical licensing collective will
be designated in lowercase or by using the abbreviated term, ``the
MLC.''
\6\ 17 U.S.C. 115(d)(3)(B)(ii) (noting that the review occurs
``every 5 years, beginning with the fifth full calendar year to
commence after the initial designation''); id. at 115(d)(5)(B)(ii)
(same).
---------------------------------------------------------------------------
A. The MLC's Designation Criteria
The MMA provides that an entity wishing to be designated as the MLC
must: (1) be a single nonprofit entity, not owned by any other entity,
created by copyright owners to carry out its statutory
responsibilities; \7\ (2) 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''; \8\ and (3) possess the administrative and technological
capabilities necessary to carry out a wide array of responsibilities
associated with administering the blanket license.\9\ If no entity
meets these statutory criteria, the Office must designate an entity as
the MLC that most nearly fits them.\10\
---------------------------------------------------------------------------
\7\ Id. at 115(d)(3)(A)(i).
\8\ Id. at 115(d)(3)(A)(ii).
\9\ Id. at 115(d)(3)(A)(iii); see also id. at 115(d)(3)(C)(i)-
(iii) (enumerating thirteen functions, in addition to the ability to
administer voluntary licenses).
\10\ Id. at 115(d)(3)(B)(iii).
---------------------------------------------------------------------------
While the first criterion regarding nonprofit status is
straightforward, the second and third criteria require more
explanation. As part of the initial MLC designation proceeding, the
Office had to address the correct construction and
[[Page 5941]]
application of the statute's endorsement criterion. The Office sought
public input on this issue.\11\ After considering the relevant comments
and evaluating the statute, it concluded that the statute's endorsement
criterion ``mandates that the entity designated as the MLC be endorsed
and supported by musical work copyright owners that together earned the
largest aggregate percentage (among MLC candidates) of total royalties
from the use of their musical works in covered activities in the U.S.
during the statutory three-year period.'' \12\ It further concluded
that ``the endorsement criterion is a plurality requirement based on
market share, measured by applicable licensing revenue.'' \13\
---------------------------------------------------------------------------
\11\ 83 FR 65747, 65753 (Dec. 21, 2018).
\12\ 84 FR at 32282.
\13\ Id. For a full discussion of the Office's conclusions
regarding how the endorsement criterion is applied, interested
parties should review that portion of the initial designation
determination. Id. at 32280-86.
---------------------------------------------------------------------------
The third MLC designation criterion addresses the administrative
and technological capabilities associated with carrying out its
statutory responsibilities. Those responsibilities are executed by the
MLC's board of directors and task-specific committees. The MMA provides
that the MLC's board will consist of 14 voting members and 3 nonvoting
members.\14\ It also requires the MLC's board to establish three
committees: an operations advisory committee; an unclaimed royalties
oversight committee; and a dispute resolution committee.\15\
---------------------------------------------------------------------------
\14\ For the statutory requirements regarding the board
described in this paragraph, see 17 U.S.C. 115(d)(3)(D)(i).
\15\ Id. at 115(d)(3)(D)(iv). Further discussion of the MLC's
board and committees can be found in the Office's initial
designation notice. 83 FR at 65748-50.
---------------------------------------------------------------------------
The MLC's responsibilities under the MMA include the following
tasks:
Offering and administering blanket licenses;
Collecting and distributing royalties from DMPs for
covered activities;
Identifying musical works embodied in sound recordings and
identifying and locating copyright owners of such musical works; \16\
---------------------------------------------------------------------------
\16\ The statute also mentions ``and shares of such works'' when
referring to musical works. See, e.g., 17 U.S.C.
115(d)(3)(C)(i)(III). For brevity's sake, this notice will omit
references to such shares.
---------------------------------------------------------------------------
Establishing and maintaining a musical works database
relevant to licensing activities under the MMA;
Administering a process by which copyright owners can
claim ownership of musical works;
Investing in relevant resources, and arranging for
services of outside vendors and others to support the MLC's activities;
and
Maintaining records of its activities and engaging in and
responding to audits.\17\
---------------------------------------------------------------------------
\17\ Id. at 115(d)(3)(C)(i)(I)-(V), (VII), (XII); see also id.
at 115(d)(3)(C)(i), (iii) (identifying the MLC's additional
statutory authorities and functions).
---------------------------------------------------------------------------
B. The DLC's Designation Criteria, Authorities, and Functions
Similar to the MLC, the DLC must be a single nonprofit entity that
is endorsed by and enjoys substantial support from DMPs, and must
possess the administrative and technological capabilities necessary to
carry out its responsibilities.\18\ Unlike the MLC, in the event the
Office is unable to identify an entity that fulfills the criteria for
the DLC, it may decline to designate one.\19\
---------------------------------------------------------------------------
\18\ Id. at 115(d)(3)(C)(i)-(iii) (enumerating thirteen
functions, in addition to the ability to administer voluntary
licenses); see also id. at 115(d)(3)(B)(iii).
\19\ Id. at 115(d)(5)(B)(iii).
---------------------------------------------------------------------------
The statute authorizes the DLC to perform the following functions:
(1) establishing a governance structure, criteria for membership, and
any dues to be paid by its members; (2) engaging in activities related
to the administrative assessment, including participating in
administrative assessment proceedings before the Copyright Royalty
Judges and engaging in efforts to enforce DMPs' notice and payment
obligations related to the assessment; (3) gathering and providing
documentation for use in proceedings before the Copyright Royalty
Judges to set the statutory mechanical license's rates and terms; (4)
initiating and participating in proceedings before the Copyright Office
with respect to the blanket license; (5) maintaining records of its
activities; and (6) assisting in publicizing the MLC's existence and
functions to copyright owners.\20\
---------------------------------------------------------------------------
\20\ Id. at 115(d)(5)(C)(i). The ``administrative assessment''
is the fee paid by digital music providers for the MLC's costs in
establishing, maintaining, and operating the MLC to fulfill its
statutory functions, excluding any added costs related to providing
services under voluntary licenses. Id. at 115(d)(7)(D), (e)(3),
(e)(6).
---------------------------------------------------------------------------
Further, under the MMA, the DLC is required to ``make reasonable,
good-faith efforts'' to assist the MLC in its efforts to locate and
identify copyright owners of unmatched musical works by encouraging
DMPs to publicize the MLC's existence and the ability of copyright
owners to claim unclaimed accrued royalties, including by posting
contact information for the collective at reasonably prominent
locations on DMP websites and applications and conducting in-person
outreach activities with songwriters.\21\
---------------------------------------------------------------------------
\21\ Id. at 115(d)(5)(C)(i)(VII), (d)(5)(C)(iii).
---------------------------------------------------------------------------
The DLC also appoints a representative to act as a nonvoting member
of the MLC's board and DMP representatives to the MLC's operations
advisory committee.\22\
---------------------------------------------------------------------------
\22\ Id. at 115(d)(3)(D)(iv)(II), (i)(IV).
---------------------------------------------------------------------------
II. Regulatory Background
A. Initial Designation
For the initial MLC and DLC designations, the Office published a
notice in the Federal Register soliciting proposals from parties who
wished to be designated as those entities, and requested information
from those parties regarding governance, administrative and
technological capabilities to perform the MMA's required functions, and
indicia of endorsement and support.\23\ The Office also requested
public comments on the parties' proposals.\24\
---------------------------------------------------------------------------
\23\ 83 FR 65747.
\24\ Id.
---------------------------------------------------------------------------
The Office received one proposal for designation as the DLC and two
proposals for designation as the MLC. It received over 600 public
comments responding to the proposals and held several ex parte meetings
addressing them.\25\ After considering these comments and the statutory
designation criteria, the Office concluded that the entity ``Digital
Licensee Coordinator, Inc.,'' incorporated in Delaware on March 20,
2019, ``me[t] each of the statutory criteria required of the digital
licensee coordinator,'' and would be designated as the DLC.\26\ With
respect to the MLC, the Office concluded that, while both candidates to
become the MLC ``[met] the statutory criteria to be a nonprofit created
to carry out its statutory responsibilities,'' the Mechanical Licensing
Collective ``made a better showing as to its prospective administrative
and technological capabilities'' and was the only candidate that met
the statute's ``endorsement'' criteria.\27\ Therefore, it designated
the entity ``Mechanical Licensing Collective,'' incorporated in
Delaware on March 5, 2019, as the MLC.\28\
---------------------------------------------------------------------------
\25\ U.S. Copyright Office, Ex Parte Communications, https://www.copyright.gov/rulemaking/mma-designations/ex-parte-communications.html (last visited Jan. 24, 2024) (hosting ex parte
meeting summary letters related to the Office's initial
designations).
\26\ 37 CFR 210.23; 84 FR at 32292, 32296.
\27\ 84 FR at 32276, 32296.
\28\ 37 CFR 210.23; 84 FR at 32296.
---------------------------------------------------------------------------
B. The Periodic Designation Review Process
The MMA requires the Office to periodically evaluate whether the
existing MLC and DLC designations
[[Page 5942]]
should be continued or, if either designation is not continued, whether
a different entity should be designated instead.\29\ The Office
commences this process by publication of a notice in the Federal
Register by the end of January in the relevant year.
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\29\ 17 U.S.C. 115(d)(3)(B)(ii); id. at 115(d)(5)(B)(ii).
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For the instant review of the MLC and DLC designations, the Office
is first soliciting information from the currently designated entities
regarding their past performance and capabilities, as well as future
plans. The responses from the Mechanical Licensing Collective and the
Digital Licensing Coordinator will be available for public review. The
Office encourages public comments concerning whether the existing MLC
and DLC designations should be continued, or different entities should
be designated. Once the public has submitted comments, the currently
designated entities will be given an opportunity to respond. After the
time for submissions from the Mechanical Licensing Collective, Digital
Licensee Coordinator, and the public have expired, the Office may also
utilize informal meetings to address discrete issues prior to issuing a
determination. Any such meetings will occur after written comments have
been submitted and will follow the Office's ex parte meeting
guidelines.\30\
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\30\ 37 CFR 205.24. Instructions on how to request an ex parte
meeting are available on the Office's website at https://www.copyright.gov/ex-parte-meetings/.
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After evaluating the record in this proceeding, the Office will
determine whether the current MLC and DLC designations should be
continued. If it concludes that a designation should be continued, it
will publish its determination in the Federal Register, ending this
proceeding.\31\ If the Office decides that either designation should
not be continued, it will solicit proposals for designation in the
Federal Register. If the Office ultimately designates a new MLC or DLC,
it will provide the reasons for such a designation and the
designation's effective date.\32\ Further, if it designates a new MLC,
it will ``adopt regulations to govern the transfer of licenses, funds,
records, data, and administrative responsibilities from the existing
mechanical licensing collective to the new entity.'' \33\
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\31\ 17 U.S.C. 115(d)(3)(B)(ii)(I); see also id. at
115(d)(5)(B)(ii).
\32\ Id. at 115(d)(3)(B)(ii)(I); see also id. at
115(d)(5)(B)(ii).
\33\ Id. at 115(d)(3)(B)(ii)(II).
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III. Request for Information From the Current Designees
The Copyright Office seeks information to assist its review of the
existing MLC and DLC designations and whether they should be continued.
The questions in this notification of inquiry are intended to focus the
current designees' submissions on the statutory designation criteria
and certain areas of interest to the Office. The parties also may
provide additional information they wish the Office to consider in
deciding whether to continue the current designations.
A. Mechanical Licensing Collective-Directed Inquiries
The Office requests the following information from the Mechanical
Licensing Collective, organized by the criteria categories below.
1. Nonprofit Status
The MLC must be a nonprofit entity, not owned by any other entity,
that is created by copyright owners to carry out its statutory
responsibilities. The Office requests proof that the Mechanical
Licensing Collective continues to meet this criterion.
2. Indicia of Endorsement and Support
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.'' \34\ The Office requests information from the Mechanical
Licensing Collective regarding whether it continues to satisfy the
endorsement criterion.
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\34\ Id. at 115(d)(3)(A)(ii).
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3. Administrative and Technological Capabilities
The MLC must have the administrative and technological capabilities
to perform its statutorily required functions.\35\ The Office requests
a detailed description explaining how the Mechanical Licensing
Collective has the administrative and technological capabilities to
perform its required functions. It asks that the response address the
following subjects:
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\35\ Id. at 115(d)(3)(A)(iii).
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i. Progress Implementing the Recommendations in the Office's
``Unclaimed Royalties'' Report
The Office requests an update on the Mechanical Licensing
Collective's efforts to implement recommendations contained in the
Office's report ``Unclaimed Royalties: Best Practice Recommendations
for the Mechanical Licensing Collective,'' \36\ including what
recommendations have been implemented to date, what efforts are in
progress, its plans to implement recommendations in the future, and a
discussion of any recommendations it is not planning to implement,
including the reasons for such decision(s).
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\36\ U.S. Copyright Office, Unclaimed Royalties: Best Practice
Recommendations for the Mechanical Licensing Collective (2021)
(``Unclaimed Royalties Report''), https://www.copyright.gov/policy/unclaimed-royalties/unclaimed-royalties-final-report.pdf.
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ii. Ownership Identification, Matching, and Claiming Process and
Maintenance of Musical Works Database
The Office requests information about the Mechanical Licensing
Collective's ability to identify musical works embodied in particular
sound recordings, and to identify and locate the copyright owners of
such musical works, including the following:
(a) Please describe how the Mechanical Licensing Collective has
worked to improve automated and manual matching since the blanket
license became available and plans to further enhance such matching
over the next 5 years, including with respect to the matching of
reported sound recordings to musical works as well as the matching of
those musical works to identified and located copyright owners;
(b) Please identify the Mechanical Licensing Collective's target
goals or estimates, including any relevant industry benchmarks, for
matching reported sound recordings to musical works and identifying and
locating copyright owners over the next five years, as expressed in
terms of (1) a match rate (i.e., the total amount of royalties matched
to musical works registered in the Mechanical Licensing Collective's
database, compared to the total royalties reported by DMPs); and (2) a
distribution rate (i.e., the total amount of royalties matched and paid
to the Mechanical Licensing Collective's members, compared to the total
royalties reported by DMPs);
(c) Please explain how the Mechanical Licensing Collective: (1) is
using quantifiable measurements to monitor its match rate confidence;
and (2) tunes confidence levels without using numerical metrics; \37\
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\37\ See The Mechanical Licensing Collective, 2022 Annual Report
9 (2022), https://www.themlc.com/hubfs/The%20MLC%202022%20Annual%20Report.pdf (stating that the Mechanical
Licensing Collective ``does not use numerical metrics to monitor
match rate confidence''); Designation Proposal of Mechanical
Licensing Collective at 40, Docket No. 2018-11 (Mar. 21, 2019)
(``Mechanical Licensing Collective Initial Designation Proposal''),
https://www.gov/comment/COLC-2018-0011-0012 (``Tuning the confidence
levels of a matching system is critical to proper functioning.'').
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[[Page 5943]]
(d) Please address whether the Mechanical Licensing Collective has
identified any notable trends or patterns in reported usage that it has
been unable to match through its efforts to date. If it has identified
such trends or patterns, please describe what targeted efforts have
been undertaken to date, and are planned to take place over the next 5
years, to attempt to address these trends or patterns;
(e) Please describe any efforts the Mechanical Licensing Collective
has undertaken to enhance database and claiming portal functionality,
including with respect to searching the database, sorting and filtering
queries, and sharing and exporting results, as well as specific plans
to develop additional functionality over the next five years;
(f) Please describe any plans the Mechanical Licensing Collective's
has to address disputes and overclaims (or overlapping claims) via a
module within its portal;
(g) Please describe the Mechanical Licensing Collective's efforts
to develop portal access (or a unique portal), or equivalent database
functionalities, for songwriters who are not self-administered (e.g.,
those represented by a publisher, administrator, or collective
management organization) to permit them to access, provide, or correct
information about themselves and their works maintained by the MLC,
including the ability for such songwriters to flag data issues with
their publisher or other representative, to provide data directly to
the MLC, and to have permissions-based access to view information such
as stream counts and revenue associated with their musical works; \38\
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\38\ See Unclaimed Royalties Report at 49-51; The Mechanical
Licensing Collective, Welcome to The MLC's Public Work Search,
https://portal.themlc.com/search#work (last visited Jan. 24, 2024)
(``Songwriters, Composers & Lyricists: . . . The MLC is working on
additional ways to help you flag and report data errors to your
publisher or administrator. We hope to launch those later this
year.'').
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(h) Please describe how the Mechanical Licensing Collective is
``maintain[ing] at regular intervals historical records of the
information contained in the public musical works database, including a
record of changes to such database information and changes to the
source of information in database fields, in order to allow tracking of
changes to the ownership of musical works in the database over time,''
the length of such ``regular intervals,'' and how it has determined
``the most appropriate method for archiving and maintaining such
historical data to track ownership and other information changes in the
database''; \39\
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\39\ 37 CFR 210.31(f).
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(i) The Mechanical Licensing Collective stated that it would employ
application program interfaces (``APIs'') ``to allow for bulk
submission and updating of rights data'' and to otherwise support data
exchange.\40\ Please describe how the Mechanical Licensing Collective
has employed systems with APIs to support data exchange to date \41\
and its plans to implement any additional such systems over the next
five years.
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\40\ Mechanical Licensing Collective Initial Designation
Proposal at 37, 47.
\41\ See The Mechanical Licensing Collective, Data Programs,
https://www.themlc.com/dataprograms#public-search-api (last visited
Jan. 24, 2024) (referencing the beta launch of Mechanical Licensing
Collective's Public Search API).
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iii. Collection and Distribution of Royalties, Including Unclaimed
Accrued Royalties
The Office requests information about the Mechanical Licensing
Collective's royalty distributions, including the following topics:
(a) In its initial designation proposal, the Mechanical Licensing
Collective stated that it ``does not intend to ever distribute the
entirety of unclaimed royalties simultaneously [and] intends to
implement policies allowing use of that discretion to retain unclaimed
accrued royalties and continue matching efforts in situations where
there is reasonable evidence that this will result in material
increases in matching success.'' \42\ Please address whether the
Mechanical Licensing Collective continues to hold these views;
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\42\ Mechanical Licensing Collective Initial Designation
Proposal at 52-53.
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(b) Please provide information regarding: (1) any steps that the
Mechanical Licensing Collective is taking to protect against the
incidence of fraudulent ownership claims and frivolous ownership
disputes; and (2) whether these steps have been successful; and
(c) Please provide information addressing whether and to what
extent the Mechanical Licensing Collective is working with DMPs,
distributors, aggregators, or others to protect against streaming fraud
and the status of such efforts, including their success or failure.
iv. Investment in Resources and Vendor Engagement
The Office understands that the Mechanical Licensing Collective is
relying on third-party vendors, including The Harry Fox Agency and
ConsenSys, to support its operations and fulfill its statutory
obligations.\43\ It is also aware that the Mechanical Licensing
Collective has recently announced a ``Supplemental Matching Network,''
consisting of Bl[ograve]kur, Jaxsta, Pex, Salt and SX Works, to improve
its matching efforts.\44\ Please provide additional information about
these relationships, including the specific functions that they
perform, or have been asked to perform, the vendors' relevant
experience with clients and projects involving similar scale and type,
or their industry-specific knowledge. Please provide the same
information with respect to any other vendors that the Mechanical
Licensing Collective uses, or has plans to use, in performing its
duties.
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\43\ The Mechanical Licensing Collective, 2022 Annual Report 36,
41 (2022), https://www.themlc.com/hubfs/The%20MLC%202022%20Annual%20Report.pdf.
\44\ See Kristin Robinson, The MLC Partners With 5 Data Matching
Companies to Increase Royalties Match Rate, Billboard (Dec. 7,
2023), https://www.billboard.com/business/publishing/the-mlc-improve-royalties-match-rate-new-data-network-1235545949/.
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v. Funding
[[Page 5944]]
The statute directs the MLC to establish procedures to guard
against ``abuse, waste, and the unreasonable use of funds.'' \45\
Review of the MMA's legislative history instructs the Office to
consider the Mechanical Licensing Collective's efficiency or,
conversely, any ``evidence of fraud, waste, or abuse, including the
failure to follow the relevant regulations adopted by the Copyright
Office'' in evaluating whether the current MLC designation should be
continued.\46\ Accordingly the Office requests information about the
Mechanical Licensing Collective's procedures to safeguard its use of
the assessment funds against abuse, waste, and other unreasonable
expenditures.\47\ The Mechanical Licensing Collective should also
provide information regarding whether it has become more efficient over
time. It should address with specificity any expenditure categories
(e.g., personnel costs, information technology, professional fees,
outreach, education, communication & events, insurance, rent, computer
equipment & office expenses) that have significantly increased since
January 2021, and a detailed explanation for the increase.
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\45\ 17 U.S.C. 115(d)(3)(D)(ix)(II)(bb)(BB). As noted above, the
DMPs fund the MLC's operations through an administrative assessment
that is established by the Copyright Royalty Judges.
\46\ H.R. Rep. No. 115-651, at 6 (2018).
\47\ Note that the MMA requires the MLC to retain a qualified
auditor to examine its books, records, and operations and prepare a
report on these topics for the MLC's board. 17 U.S.C.
115(d)(3)(D)(ix)(II). The auditor's letter to the MLC's board can be
found on the Mechanical Licensing Collective's website. Letter from
WithumSmith+Brown, P.C. to the Board of Directors of the Mechanical
Licensing Collective (Dec. 22, 2023), https://www.themlc.com/hubfs/Auditor%20Letter%20to%20Board%20re%20MMA%20Audit%20Provision%20(115(d
)(3)(D)(ix)(II)).pdf.
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vi. Governance
The Office seeks information related to the Mechanical Licensing
Collective's governance, including:
(a) A copy of the Mechanical Licensing Collective's current bylaws,
including a summary of changes made, if any, from its initial bylaws;
(b) A list of all the committees the Mechanical Licensing
Collective has created that are not required by statute, the membership
of those committees, and how it determined the membership of those
committees;
(c) Copies of all the Mechanical Licensing Collective's policies
addressing its statutory duties, procedures, practices, and guidelines
(e.g., those governing the collection, processing, holding, and
distribution of royalties, guidelines for adjustments, member
registration, ownership disputes, automated and manual matching, data
quality and verification, investments, conflicts of interest), but
excluding policies unrelated to the MLC's statutory duties (e.g.,
website terms of use, human resources), the location of these policies,
procedures, and practices on its website if they are currently
available to the public, and a summary of changes made, if any, from
earlier versions of these policies, procedures, practices, and
guidelines; \48\
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\48\ To the extent that any of these materials contain
privileged or confidential commercial or financial information or
trade secrets, it should provide two versions of such documents to
the Office: one redacted copy appropriate for public viewing and an
unredacted copy for the Office. See, e.g., Five Years Later--The
Music Modernization Act: Hearing Before the Subcomm. on Courts,
Intell. Prop. and the Internet of the H. Comm. on the Judiciary,
117th Cong. 6 (2023) (responses to questions for the record of Kris
Ahrend, CEO, the Mechanical Licensing Collective) (``Our financial
advisors have advised that we not make public any details about
specific investment solutions [of the Mechanical Licensing
Collective's investment policy]. Their reasons include security
concerns and concerns that such information could be used alongside
our public royalty distribution timelines to engage in market timing
to the detriment of [the Mechanical Licensing Collective].''); see
also 5 U.S.C. 552(b)(4) (exempting agencies from requiring
disclosures if they involve ``trade secrets and commercial or
financial information obtained from a person and privileged or
confidential'').
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(d) The status of any policies or procedures related to the
distribution of unclaimed accrued royalties and accrued interest;
(e) An explanation of how the Mechanical Licensing Collective is
ensuring that: (1) its policies, procedures, and practices are
transparent and accountable; \49\ and (2) that all board and committee
members have equal access to information in the Mechanical Licensing
Collective's possession;
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\49\ See 17 U.S.C. 115(d)(3)(D)(ix)(I)(aa).
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(f) The results of the Mechanical Licensing Collective's ``Board
Diversity Report'' for 2021 and 2023; \50\ and
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\50\ The Mechanical Licensing Collective's bylaws require a
biennial ``Board Diversity Report,'' that ``address[es] the extent
to which the Board fully and fairly represents the whole music
publishing and songwriting communities, and should specifically note
any actual or potential concerns or shortcomings.'' It also
``address[es] diversity in such areas as gender/race/ethnicity,
income, musical genre, geography and expertise/experience.'' The
Mechanical Licensing Collective, Bylaws of the Mechanical Licensing
Collective sec. 4.8, https://f.hubspotuserconte.net/hubfs/8718396/files/2020-05/Bylaws%20of%20The%20MLC.pdf (last visited Jan. 24,
2024).
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(g) How the Mechanical Licensing Collective approaches the
resolution of disputes with other interested parties (e.g., DMPs,
songwriters, publishers, or record labels) regarding interpretation of
the MMA or the Office's regulations.\51\
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\51\ The Office notes that certain stakeholders would welcome
referring such questions or disputes to the Office. See, e.g., Five
Years Later--The Music Modernization Act: Hearing Before the
Subcomm. on Courts, Intell. Prop. and the Internet of the H. Comm.
on the Judiciary, 117th Cong. 37, 57-58 (2023) (statements of
Garrett Levin, President and CEO, Digital Media Association and Abby
North, President, North Music Group).
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vii. Education and Outreach
The Office requests information regarding the Mechanical Licensing
Collective's education and outreach efforts, including how it reaches
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).''
\52\ The Office is also interested in how the Mechanical Licensing
Collective ``tailor[s] its education and outreach activities in
recognition of the industry's broad and diverse spectrum of songwriters
and copyright owners, including by stakeholders' varying levels of
sophistication, geographic location, age, and music genre,'' including
how it ``employ[s] dedicated, persistent outreach to historically
underserved groups.'' \53\ The Office is further interested in how the
Mechanical Licensing Collective is using data in decision-making and
performance measurement, with respect to its education and outreach
efforts, for example, how it is using data to evaluate its education
and outreach efforts (e.g., in-person outreach at events, webinars,
advertising, interviews for articles and podcasts, partnerships) when
considering whether to participate in an event or activity. Finally,
the Office is interested in how the Mechanical Licensing Collective is
using ``member demographic statistics and DMP usage analytics . . . to
better target its education and outreach efforts towards under-
participating groups.'' \54\
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\52\ S. Rep. No. 115-339, at 14 (2018).
\53\ Unclaimed Royalties Report at 29.
\54\ Id. at 38.
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The Mechanical Licensing Collective is encouraged to provide any
other information that it believes is relevant to demonstrate it
continues to meet the statutory designation criteria.
B. Digital Licensee Coordinator-Directed Inquiries
The Office requests the following information from the Digital
Licensee Coordinator relevant to determining whether its existing
designation should be continued:
1. Nonprofit Status
The Office requests proof that Digital Licensee Coordinator is a
nonprofit entity, not owned by any other entity,
[[Page 5945]]
that is created to carry out its statutory responsibilities.\55\
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\55\ 17 U.S.C. 115(d)(5)(A)(i).
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2. Indicia of Endorsement and Support
The Office requests information from the Digital Licensee
Coordinator regarding whether it continues to 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.'' \56\
---------------------------------------------------------------------------
\56\ Id. at 115(d)(5)(A)(ii).
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3. Administrative Capabilities and Governance
The DLC must have the administrative capabilities to perform its
statutory functions.\57\ The Office requests a detailed description of
the Digital Licensee Coordinator's administrative capabilities and its
performance of the following functions:
---------------------------------------------------------------------------
\57\ Id. at 115(d)(5)(A)(iii).
---------------------------------------------------------------------------
i. Governance
The Office requests a copy of the Digital Licensee Coordinator's
current bylaws, including a summary of changes made, if any, from its
initial bylaws. To the extent not addressed by its bylaws, the Office
also requests a summary of its governance structure, criteria for
membership, and dues paid by its members. Lastly, the Office requests a
list of the Digital Licensee Coordinator's current members, and a
description of its efforts to grow its membership to other DMPs, and
any challenges related to such efforts.
ii. Notice and Payment Obligations
The Office requests information addressing the Digital Licensee
Coordinator's efforts to enforce notice and payment obligations with
respect to the administrative assessment, including: (1) how it is
coordinating such efforts with the Mechanical Licensing Collective; and
(2) the extent to which it is disclosing information to, and receiving
information from, the Mechanical Licensing Collective on this topic.
iii. Participation in Proceedings Before the Copyright Office and
Copyright Royalty Judges
The Office requests a summary of the Digital Licensee Coordinator's
participation in Office or Copyright Royalty Judge proceedings,
including: (1) participating in proceedings before the Copyright
Royalty Judges to establish the administrative assessment; (2)
gathering and providing documentation for use in proceedings before the
Copyright Royalty Judges to set rates and terms under the mechanical
license; and (3) participating in proceedings before the Office with
respect to activities regarding the blanket license.\58\
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\58\ Id. at 115(d)(5)(C)(i)(III)-(V).
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iv. Maintaining Records of the Digital Licensee Coordinator's
Activities
The Office requests a description of how the Digital Licensee
Coordinator is maintaining records of its activities, including efforts
to ensure that confidential, private, proprietary, or privileged
information contained in its records is not improperly disclosed or
used.\59\
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\59\ Id. at 115(d)(5)(C)(i)(VI), (d)(12)(C).
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v. Assistance With Publicity for Unclaimed Royalties
The MMA directs the DLC to ``make 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.''
\60\ The Office requests a detailed description of the steps that the
Digital Licensee Coordinator has taken to fulfill this requirement,
including whether all its members have posted the MLC's contact
information in a prominent location on their websites and
applications.\61\ The Office also requests a summary of the Digital
Licensee Coordinator's in-person outreach activities with
songwriters.\62\
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\60\ See id. at 115(d)(5)(C)(iii).
\61\ Id. at 115(d)(5)(C)(iii)(I).
\62\ Id. at 115(d)(5)(C)(iii)(II).
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The Digital Licensee Coordinator is encouraged to provide any other
information that it believes is relevant to demonstrate it continues to
meet the statutory designation criteria.
IV. Public Participation
Interested members of the public are encouraged to comment on the
topics addressed in the designees' submissions or raised by the Office
in this notification of inquiry.\63\ Commenters may also address any
topics relevant to this periodic review of the MLC and DLC
designations. Without prejudice to its review of the current
designations, the Office hopes that this proceeding will serve as an
opportunity for any songwriter, publisher, or DMP who wishes to express
concerns, satisfaction, or priorities with respect to the
administration of the MMA's blanket licensing regime to do so, and that
any designated MLC or DLC will use that feedback to continually improve
its services.
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\63\ Submissions by the Mechanical Licensing Collective and
Digital Licensee Coordinator will be found on the Office's website
at https://www.copyright.gov/rulemaking/mma-designations/2024
approximately sixty days after the publication of this Notification
of Inquiry.
Dated: January 25, 2024.
Suzanne V. Wilson,
General Counsel and Associate Register of Copyrights.
[FR Doc. 2024-01781 Filed 1-29-24; 8:45 am]
BILLING CODE 1410-30-P
