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AGENCY:

U.S. Copyright Office, Library of Congress.

ACTION:

Interim rule.

SUMMARY:

The U.S. Copyright Office is issuing an interim rule regarding the Musical Works Modernization Act, title I of the Orrin G. Hatch-Bob Goodlatte Music Modernization Act. The law establishes a new blanket compulsory license that will be administered by a mechanical licensing collective, which will make available a public musical works database as part of its statutory duties. Having solicited public comments through previous notifications of inquiry and a notice of proposed rulemaking, the Office is issuing interim regulations prescribing categories of information to be included in the public musical works database, as well as rules related to the usability, interoperability, and usage restrictions of the database. The Office is also issuing interim regulations related to ensuring appropriate transparency of the mechanical licensing collective itself.

DATES:

Effective February 16, 2021.

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FOR FURTHER INFORMATION CONTACT:

Regan A. Smith, General Counsel and Associate Register of Copyrights, by email at regans@copyright.gov or Anna B. Chauvet, Associate General Counsel, Start Printed Page 86804by email at achau@copyright.gov. Each can be contacted by telephone by calling (202) 707-8350.

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SUPPLEMENTARY INFORMATION:

I. Background

On October 11, 2018, the president signed into law the Orrin G. Hatch-Bob Goodlatte Music Modernization Act, H.R. 1551 (“MMA”).^[1] Title I of the MMA, the Musical Works Modernization Act, substantially modifies the compulsory “mechanical” license for making and distributing phonorecords of nondramatic musical works under 17 U.S.C. 115.^[2] It does so by switching from a song-by-song licensing system to a blanket licensing regime that becomes available on January 1, 2021 (the “license availability date”), and is administered by a mechanical licensing collective (“MLC”) designated by the Copyright Office (“Office”).^[3] Among other things, the MLC is responsible for “[c]ollect[ing] and distribut[ing] royalties” for covered activities, “[e]ngag[ing] in efforts to identify musical works (and shares of such works) embodied in particular sound recordings and to identify and locate the copyright owners of such musical works (and shares of such works),” and “[a]dminister[ing] a process by which copyright owners can claim ownership of musical works (and shares of such works).” ^[4] It also must “maintain the musical works database and other information relevant to the administration of licensing activities under [section 115].” ^[5]

A. Regulatory Authority Granted to the Office

The MMA enumerates several regulations that the Office is specifically directed to promulgate to govern the new blanket licensing regime, and Congress invested the Office with “broad regulatory authority” ^[6] to “conduct such proceedings and adopt such regulations as may be necessary or appropriate.” ^[7] The MMA specifically directs the Office to promulgate regulations related to the MLC's creation of a database to publicly disclose musical work ownership information and identify the sound recordings in which the musical works are embodied.^[8] As discussed more below, the statute requires the public database to include various types of information, depending upon whether a musical work has been matched to a copyright owner.^[9] For both matched and unmatched works, the database must also include “such other information” “as the Register of Copyrights may prescribe by regulation.” ^[10] The database must “be made available to members of the public in a searchable, online format, free of charge,” ^[11] and its contents must also be made available “in a bulk, machine-readable format, through a widely available software application,” to certain parties, including blanket licensees and the Office, free of charge, and to “[a]ny other person or entity for a fee not to exceed the marginal cost to the mechanical licensing collective of providing the database to such person or entity.” ^[12]

In addition, the legislative history contemplates that the Office will “thoroughly review[ ]” ^[13] policies and procedures established by the MLC and its three committees, which the MLC is statutorily bound to ensure are “transparent and accountable,” ^[14] and promulgate regulations that “balance[ ] the need to protect the public's interest with the need to let the new collective operate without over-regulation.” ^[15] Congress acknowledged that “[a]lthough the legislation provides specific criteria for the collective to operate, it is to be expected that situations will arise that were not contemplated by the legislation,” and that “[t]he Office is expected to use its best judgement in determining the appropriate steps in those situations.” ^[16] Legislative history further states that “[t]he Copyright Office has the knowledge and expertise regarding music licensing through its past rulemakings and recent assistance to the Committee[s] during the drafting of this legislation.” ^[17] Accordingly, in designating the MLC as the entity to administer the blanket license, the Office stated that it “expects ongoing regulatory and other implementation efforts to . . . extenuate the risk of self-interest,” and that “the Register intends to exercise her oversight role as it pertains to matters of governance.” ^[18] Finally, as detailed in the Office's prior notifications and notice of proposed rulemaking, while the MMA envisions the Office reasonably and prudently exercising regulatory authority to facilitate appropriate transparency of the collective and the public musical works database, the statutory language as well as the collective's structure separately include elements to promote disclosure absent additional regulation.^[19]

B. Rulemaking Background

Against that backdrop, on September 24, 2019, the Office issued a notification of inquiry (“September NOI”) seeking public input on a variety of aspects related to implementation of title I of the MMA, including issues regarding information to be included in the public musical works database (e.g., what additional categories of information might be appropriate to include by regulation), as well as the usability, interoperability, and usage restrictions of the database (e.g., technical or other specific language that might be helpful to consider in promulgating regulations, discussion of the pros and cons of applicable standards, and whether historical snapshots of the database should be maintained to track ownership changes over time).^[20] In addition, the September NOI sought public comment on any issues that Start Printed Page 86805should be considered relating to the general oversight of the MLC.^[21]

In response, many commenters emphasized the importance of transparency of the public database and the MLC's operations, and urged the Office to exercise expansive and robust oversight.^[22] Given these comments, on April 22, 2020, the Office issued a second notification of inquiry,^[23] and on September 17, 2020, the Office issued a notice of proposed rulemaking (“NPRM”),^[24] both soliciting further comment on these issues. In response to the NPRM, the comments overall were positive about the proposed rule, expressing appreciation for the Office's responsiveness to stakeholder comments.^[25]

Having reviewed and considered all relevant comments received in response to both notifications of inquiry and the NPRM, and having engaged in transparent ex parte communications with commenters, the Office is issuing an interim rule regarding the categories of information to be included in the public musical works database, as well as the usability, interoperability, and usage restrictions of the database. The Office is also issuing interim regulations related to ensuring appropriate transparency of the mechanical licensing collective itself. Except as otherwise discussed below, the proposed rule is being adopted for the reasons discussed in the NPRM. The Office has determined that it is prudent to promulgate this rule on an interim basis so that it retains some flexibility for responding to unforeseen complications once the MLC launches the musical works database.^[26] In doing so, the Office emphasizes that adoption on an interim basis is not an open-ended invitation to revisit settled provisions or rehash arguments, but rather is intended to allow necessary modifications to be made in response to new evidence or unforeseen issues, or where something is otherwise not functioning as intended.

The interim rule is intended to grant the MLC flexibility in various ways instead of adopting requirements that may prove overly prescriptive as the MLC administers the public database. For example, and as discussed below, the interim rule grants the MLC flexibility in the following ways:

• To label fields in the public database, as long as the labeling takes into account industry practice and reduces the likelihood of user confusion.
• To include non-confidential information in the public database that is not specifically identified by the statute but the MLC finds useful, including information regarding terminations, performing rights organization (“PRO”) affiliation, and DDEX Party Identifier (DPID).^[27]

• To allow songwriters, or their representatives, to have songwriter information listed anonymously or pseudonymously.
• To select the most appropriate method for archiving and maintaining historical data to track ownership and other information changes in the public database.
• To select the method for displaying data provenance information in the public database.
• To determine the precise disclaimer language for alerting users that the database is not an authoritative source for sound recording information.
• To develop reasonable terms of use for the public database, including restrictions on use.
• To block third parties from bulk access to the public database based on their attempts to bypass marginal cost recovery or other unlawful activity with respect to the database.
• To determine the initial format in which the MLC provides bulk access to the public database, with a six-month extension to implement bulk access through application programming interfaces (“APIs”).
• To determine how to represent processing and distribution times for royalties disclosed in the MLC's annual report.

II. Interim Rule

A. Ownership of Data in the Public Musical Works Database

The MLC must establish and maintain a free-of-charge public database of musical work ownership information that also identifies the sound recordings in which the musical works are embodied,^[28] a function expected to provide transparency across the music industry.^[29] The Office appreciates that the MLC “is working on launching the public search window on the website that will allow members of the public to search the musical works database in January [2021],” and that the MLC “anticipates launching the bulk data program to members of the public in January” ^[30] (discussed more below).

As noted in the NPRM, the statute and legislative history emphasize that the database is meant to benefit the music industry overall and is not “owned” by Start Printed Page 86806the collective itself.^[31] The MLC acknowledges this, stating that “the data in the public MLC musical works database is not owned by the MLC or its vendor,” and that “data in this database will be accessible to the public at no cost, and bulk machine-readable copies of the data in the database will be available to the public, either for free or at marginal cost, pursuant to the MMA.” ^[32] The Alliance for Recorded Music (“ARM”), Recording Academy, and Songwriters Guild of America (“SGA”) & Society of Composers & Lyricists (“SCL”) praised the Office for addressing the issue of data ownership, with ARM “encourag[ing] the Office to make this point explicit in the regulations.” ^[33] In light of these comments, and the statute and legislative history, the interim rule confirms that data in the public musical works database is not owned by the mechanical licensing collective or any of its employees, agents, consultants, vendors, or independent contractors.

B. Categories of Information in the Public Musical Works Database

The statute requires the MLC to include various types of information in the public musical works database. For musical works that have been matched (i.e., the copyright owner of such work (or share thereof) has been identified and located), the statute requires the public database to include:

1. The title of the musical work;

2. The copyright owner of the musical work (or share thereof), and the ownership percentage of that owner;

3. Contact information for such copyright owner; and

4. To the extent reasonably available to the MLC, (a) the ISWC for the work, and (b) identifying information for sound recordings in which the musical work is embodied, including the name of the sound recording, featured artist,^[34] sound recording copyright owner, producer, ISRC, and other information commonly used to assist in associating sound recordings with musical works.^[35]

For unmatched musical works, the statute requires the database to include, to the extent reasonably available to the MLC:

1. The title of the musical work;

2. The ownership percentage for which an owner has not been identified;

3. If a copyright owner has been identified but not located, the identity of such owner and the ownership percentage of that owner;

4. Identifying information for sound recordings in which the work is embodied, including sound recording name, featured artist, sound recording copyright owner, producer, ISRC, and other information commonly used to assist in associating sound recordings with musical works; and

5. Any additional information reported to the MLC that may assist in identifying the work.^[36]

In other words, the statute requires the database to include varying degrees of information regarding the musical work copyright owner (depending on whether the work is matched), but for both matched and unmatched works, identifying information for sound recordings in which the work is embodied (i.e., sound recording name, featured artist, sound recording copyright owner, producer, ISRC, and other information commonly used to assist in associating sound recordings with musical works). For both matched and unmatched works, the Register of Copyrights may prescribe inclusion of additional fields by regulation.” ^[37] The “Register shall use its judgement to determine what is an appropriate expansion of the required fields, but shall not adopt new fields that have not become reasonably accessible and used within the industry unless there is widespread support for the inclusion of such fields.” ^[38]

In considering whether to prescribe the inclusion of additional fields beyond those statutorily required, the Office focused on fields that the record indicates would advance the goal of the public database: Reducing the number of unmatched musical works by accurately identifying musical work copyright owners so they can be paid what they are owed under the section 115 statutory license.^[39] At the same time, the Office is mindful of the MLC's corresponding duties to keep confidential business and personal information secure and inaccessible; for example, data related to computation of market share is contemplated by the statue as sensitive and confidential.^[40] Recognizing that a robust musical works database may contain many fields of information, the interim rule establishes a floor of required information that users can reliably expect to access in the public database, while providing the MLC with flexibility to include additional data fields that it finds helpful.^[41] Stakeholder comments regarding the types of information to include (or exclude) are discussed by category below.

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1. Songwriter or Composer

Commenters—including the MLC ^[42] —overwhelmingly agreed that the database should include songwriter and composer information,^[43] and so the interim rule requires including such information in the public database, to the extent reasonably available to the collective.^[44] SGA & SCL suggest that the phrase “to the extent reasonably available to the collective” “serves to diminish the requisite and explicit value of songwriter/composer identifying information.” ^[45] The phrase “to the extent reasonably available to the mechanical licensing collective” for songwriter or composer information is employed to mirror the statutory qualification with respect to inclusion of other types of information.^[46] For consistency with the statute (and the other fields discussed below), the interim rule adopts this aspect of the proposed rule without modification.

Commenters also supported the ability of songwriters, or their representatives, to mask songwriters' identity to avoid being associated with certain musical works by having their information listed anonymously or pseudonymously in the public musical works database.^[47] While the proposed rule granted the MLC discretion to allow songwriters this option,^[48] SGA & SCL suggest that “that such a regulation be extended into a mandatory direction to the MLC to accept such direction from a music creator.” ^[49] By contrast, while acknowledging “that writers often use pennames and that there are also current trends to hide an artist's identity, in which case the writer may want to remain anonymous,” SONA expresses concern that “not having a songwriter's name associated with a musical work is often one of the biggest challenges in ensuring a songwriter receives proper payment,” and that “while at the time of creation that may be the express wish of the songwriter, it is critical that the creator and the musical work do not become dissociated over the term of the work's copyright.” ^[50] SONA suggests that a songwriter should have the option of staying anonymous or using a pseudonym in the public database only if “the MLC has sufficient contact information with the songwriter's representation,” and that the rule should “ensure adequate information to contact the songwriter or their representatives is easily accessible for users of that writer's musical works.” ^[51]

For its part, the MLC contends that “[i]f the copyright owner or administrator requests that the writer be identified as `anonymous' or by a pseudonym, it can do so when it submits the musical work information to the MLC,” and that the MLC will “consider subsequent requests by an owner or administrator to change the name to `anonymous' or to a pseudonym.” ^[52] The MLC contends that the regulations should not “make it mandatory for the MLC to change songwriter names in the musical works database at the request of any particular party, because such may not always be appropriate,” and that the MLC “is also responsible for maintaining an accurate musical works database, and must be afforded the ability to fulfill that function.” ^[53]

Having carefully considered this issue, the Office has included in the interim rule adjusted language ensuring that the MLC develops and makes publicly available a policy on how it will consider requests by copyright owners or administrators to change songwriter names to be listed anonymously or pseudonymously. The Office encourages the MLC to grant any subsequent requests by a copyright owner or administrator to change a songwriter name to “anonymous” or to a pseudonym.

2. Studio Producer

As the statute requires the public database to include “producer” to the extent reasonably available to the MLC,^[54] so does the interim rule. Initially, there appeared to be stakeholder disagreement about the meaning of the term “producer,” which has since been resolved to clarify that it refers to the studio producer.^[55] Because the term “producer” relates not only to the public database, but also to information provided by digital music providers in reports of usage, the Office defined “producer” in its interim rule concerning reports of usage, notices of license, and data collection efforts, among other things, to define “producer” to mean studio producer throughout its section 115 regulations.^[56]

3. Unique Identifiers

The statute requires the MLC to include ISRC and ISWC codes, when reasonably available.^[57] According to the legislative history, “[u]sing standardized metadata such as ISRC and ISWC codes, is a major step forward in reducing the number of unmatched works.” ^[58] The proposed rule required the public database to include the Interested Parties Information (“IPI”) ^[59] and/or Start Printed Page 86808International Standard Name Identifier (“ISNI”) ^[60] for each songwriter, publisher, and musical work copyright owner, as well as the Universal Product Code (“UPC”), to the extent reasonably available to the MLC.^[61] As proposed, the public database must also include the MLC's standard identifier for the musical work, and to the extent reasonably available to the MLC, unique identifier(s) assigned by the blanket licensee, if reported by the blanket licensee.^[62] The Office sought public comment on whether IPIs and/or ISNIs for foreign collective management organizations (“CMOs”) should be required to be listed separately.^[63]

In response to the proposed rule, commenters expressed continued support for including IPIs, ISNIs, and UPC,^[64] which the MLC has agreed to include.^[65] The interim rule thus adopts this aspect of the proposed rule without modification. SGA & SCL “support the comments of CISAC and BIEM . . . as to the listing of IPIs and ISNIs for foreign collective management organizations.” ^[66] As discussed more below, the Office declines to require the MLC to separately include IPIs and ISNIs for foreign CMOs in the database at this time, apart from where they may otherwise already be included as a relevant musical work copyright owner.

4. Information Related to Ownership and Control of Musical Works

By statute, the database must include information regarding the ownership of the musical work as well as the underlying sound recording, including “the copyright owner of the work (or share thereof), and the ownership percentage of that owner,” or, if unmatched, “the ownership percentage for which an owner has not been identified.” ^[67] The statute also requires a field called “sound recording copyright owner,” the meaning of which is discussed further below.

Although the MMA does not reference music publishing administrators—that is, entities responsible for managing copyrights on behalf of songwriters, including administering, licensing, and collecting publishing royalties without receiving an ownership interest in such copyrights—a number of commenters have urged inclusion of this information in the public musical works database.^[68] As one commenter suggested, because “a copyright owner's `ownership' percentage may differ from that same owner's `control' percentage,” the public database should include separate fields for “control” versus “ownership” percentage.^[69] The MLC agreed,^[70] stating that “the database should include information identifying the administrators or authorized entities who license the relevant musical work and/or collect royalties for such work on behalf of the copyright owner.” ^[71] In addition, with respect to specific ownership percentages, which are required by statute to be made publicly available, the MLC expressed its intention to mark overclaims (i.e., shares totaling more than 100%) as such and show the percentages and total of all shares claimed so that overclaims and underclaims (i.e., shares totaling less than 100%) will be transparent.^[72]

Relatedly, CISAC & BIEM raised concerns about needing “to clarify the concept of `copyright owner,' ” as “foreign collective management organizations (CMOs) . . . are also considered copyright owners or exclusively mandated organizations of the musical works administered by these entities,” and thus “CMOs represented by CISAC and BIEM should be able to register in the MLC database the claim percentages they represent.” ^[73] The MLC responded that it will “engage in non-discriminatory treatment towards domestic and foreign copyright owners, CMOs and administrators,” ^[74] and that it “intends to operate on a non-discriminatory basis, and all natural and legal persons or entities of any nationality are welcome to register their claims to works with the MLC.” ^[75]

The NPRM noted that “[w]hile the MMA does not reference foreign musical works specifically, nothing in the statute indicates that foreign copyright owners should be treated differently from U.S. copyright owners under the blanket licensing regime, or prevents the MLC from seeking or including data from foreign CMOs in building the public database.” ^[76] The Office also stated that “[w]here copyright ownership has been assigned or otherwise transferred to a foreign CMO or, conversely, a U.S. sub-publisher, the statute does not specify that it should be treated differently from a similarly-situated U.S. entity that has been assigned or otherwise been transferred copyright ownership.” ^[77] The Office noted that the MLC appeared to be planning for data collection from foreign CMOs, as evidenced by promotional material in connection with its Data Quality Initiative (DQI).^[78]

Based on public comments, the Office concluded that to the extent reasonably available to the MLC, it would be beneficial for the database to include information related to all persons or entities that own or control the right to license and collect royalties related to musical works in the United States, and that music publishing administrator and control information would be valuable additions.^[79] Accordingly, the proposed rule required the public database to include administrator(s) or other authorized entity(ies) who license the musical work (or share thereof) and/or collect mechanical royalties for such musical work (or share thereof) in the United States.^[80] It would not prevent the MLC from including additional information with respect to foreign CMOs.^[81]

In response, CISAC & BIEM again expressed “the need to have CMOs clearly recognized as `copyright Start Printed Page 86809owners,'” explaining that “outside the U.S., the `copyright ownership' of the work is attributed to the CMOs managing the mechanical rights . . .” ^[82] CISAC & BIEM also contended that there is no “business need to include the creator percentage shares in the musical works” in the public database (as opposed to copyright owner share(s), which is required by the statute), “as this information [is] not required to license or distribute musical works, and constitutes particularly sensitive and confidential financial and business information for creators and their representatives.” ^[83] SONA emphasized the importance of the Office's statement that “there is no indication that foreign copyright owners should have different treatment under the blanket licensing regime.” ^[84] For its part, the MLC has “repeatedly maintained that it will engage in non-discriminatory treatment towards domestic and foreign copyright owners, CMOs and administrators,” and that “foreign CMOs should be treated no differently in the database from other mechanical rights administrators.” ^[85] The MLC also stated that if a foreign CMO “is an owner or administrator of US copyright rights, it will be treated as such, and in a non-discriminatory manner as compared to other US copyright owners or administrators.” ^[86]

Having considered these comments, the Office reaffirms the general requirement that the database include information related to all persons or entities that own or control the right to license and collect royalties related to musical works in the United States, irrespective of whether those persons or entities are located outside the United States. The interim rule thus adopts this aspect of the proposed rule without modification. To address CISAC & BIEM's concerns about the recognition of copyright ownership by foreign CMOs, the interim rule references the statutory definitions of “copyright owner” and “transfer of copyright ownership,” and states that a copyright owner includes entities, including foreign CMOs, to which “copyright ownership has been transferred through an assignment, mortgage, exclusive license, or any other conveyance, alienation, or hypothecation of a copyright or of any of the exclusive rights comprised in a copyright, whether or not it is limited in time or place of effect, but not including a nonexclusive license.” ^[87] Where a foreign CMO is the copyright owner of the musical work under U.S. law, the database should identify the foreign CMO as the copyright owner, along with its percentage share.^[88] The database should take a parallel approach with respect to administration rights. Depending upon the specific arrangements in place, this may mean that the database will need to display information related to both the foreign CMO as well as a U.S. sub-publisher or administrator (along with percentage shares).^[89] And while the songwriter or composer of the same musical work must, by regulation, be identified in the database as the songwriter or composer (as discussed above), if he or she is not the copyright owner due to assignment of the copyright to a foreign CMO, he or she would not have ownership shares to display in the database. To the extent that sub-publishers own or control foreign musical works in the U.S. and foreign CMOs do not (i.e., the foreign CMOs do not have a U.S. right of ownership or administration), the Office concludes that the mechanical licensing collective should not be required to include information about such foreign CMOs in the database. The Office recognizes that including foreign CMO information even when the CMOs are not copyright owners or administrators in the U.S. may be desired by certain commenters, but the Office is reluctant to require the MLC to include such information at this time, given the MLC's indication that it needs to focus on more core tasks. As noted above, in considering whether to prescribe the inclusion of additional fields beyond those statutorily required, the Office focused on fields that the record indicates would advance the goal of the public database: Reducing the number of unmatched musical works by accurately identifying musical work copyright owners so they can be paid what they are owed under the section 115 statutory license. Should confusion arise after the musical works database becomes publicly available, the Office is willing to consider whether adjustment to the interim rule is warranted.

5. Additional Information Related To Identifying Musical Works and Sound Recordings

Given the general consensus of comments, the interim rule largely adopts the proposed rule without modification, which requires the public database to include the following fields, to the extent reasonably available to the MLC: Alternate titles for musical works, opus and catalog numbers of classical compositions, and track duration,^[90] version, and release date of sound recordings.^[91] It also incorporates the statutory requirements to include, to the extent reasonably available to the mechanical licensing collective, other non-confidential information commonly used to assist in associating sound recordings with musical works (for matched musical works), and for unmatched musical works, other non-confidential information commonly used to assist in associating sound recordings with musical works, and any additional non-confidential information reported to the mechanical licensing collective that may assist in identifying musical works.^[92] The MLC notes that “[o]pus and catalog numbers for classical compositions and UPC have now been added to the DDEX format, so the MLC will provide that information Start Printed Page 86810to the extent it is reasonably available to the MLC.” ^[93]

ARM and SoundExchange seek clarity regarding the meaning of “release date.” ^[94] ARM maintains that because “it is not uncommon for a given sound recording to be released on more than one product, each with its own release date,” “the release date included in the database must reflect the actual, not the intended, release date,” ^[95] and “regulations should prohibit the MLC from publicly displaying any data about a sound recording prior to its actual release date.” ^[96] The Office agrees that “release date” should not be an intended release date; rather, it should reflect the date on which the recording was first released. The Office encourages the MLC to include an explanation of release date in its glossary.^[97]

Finally, the MLC contends that the phrase “other non-confidential information commonly used to assist in associating sound recordings with musical works” is vague, and suggests changing it to “other non-confidential information that the MLC reasonably believes would be useful to assist in associating sound recordings with musical works.” ^[98] After carefully considering the statute, legislative history, and comments, the Office agrees that the MLC should have some flexibility to include additional information that may be helpful for matching purposes, but is also mindful that the phrase proposed by the NPRM was taken directly from the statute. Accordingly, the Office has adjusted the interim rule to add the phrase “reasonably believes, based on common usage” for consistency with the statute (i.e., the MLC is required to include, to the extent reasonably available to it, other non-confidential information that it reasonably believes, based on common usage, would be useful to assist in associating sound recordings with musical works).

6. Performing Rights Organization Affiliation

In response to the September NOI, a few commenters maintained that the public database should include PRO affiliation.^[99] By contrast, the MLC and FMC raised concerns about including and maintaining PRO affiliation in the public database.^[100] The largest PROs, the American Society of Composers, Authors, and Publishers (“ASCAP”) and Broadcast Music, Inc. (“BMI”), also objected, stating that because “music performing rights organizations such as BMI and ASCAP all have comprehensive databases on musical works ownership rights, and these databases are publicly available,” “administration of data with respect to the licensing of public performing rights does not require government intervention.” ^[101]

After evaluating these comments, in the April NOI the Office tentatively concluded against requiring PRO affiliation in the public database, noting that “[b]ecause the MMA explicitly restricts the MLC from licensing performance rights, it seems unlikely to be prudent or frugal to require the MLC to expend resources to maintain PRO affiliations for rights it is not permitted to license.” ^[102] Similarly, the Office declined to require the inclusion of PRO affiliation in the proposed rule.^[103]

In response to the NPRM, the DLC asked the Office to reconsider and include PRO affiliation in the public database.^[104] The DLC contends that PRO affiliation may aid matching in some instances, giving the example of songwriters affiliated with ASCAP being able to “target their searches of the MLC's database for works that the MLC has affiliated with ASCAP,” and “more readily confirm that the PRO and MLC databases contain consistent information regarding information such as share splits and unique identifiers” (i.e., “mak[ing] the MLC database a useful cross-check for PRO data”).^[105] The DLC asks that the MLC “not throw away valuable musical works metadata,” and states it “would not be opposed to an accommodation such as a six-month transition period for this aspect of the database.” ^[106] MAC similarly requests inclusion of PRO affiliation.^[107] By contrast, CISAC & BEIM, FMC, Recording Academy, and SGA & SCL agree it should not be included, with Recording Academy stating that “information related to public performance rights goes beyond the scope of the MMA, which is focused on mechanical rights.” ^[108] For its part, the MLC contends that it “should be afforded the opportunity to focus on its main priority of a robust and fulsome mechanical rights database,” and not include PRO affiliation, but that “[i]f, at some time in the future, the MLC has the capacity and resources to also incorporate performance rights information, it may undertake this task . . .” ^[109]

Having considered these comments, the statutory text, and legislative history, the Office concludes that the mechanical licensing collective should not be required to include PRO affiliation in the public database at this time. The Office recognizes that PRO affiliation is desired by certain commenters, particularly licensees, for transparency purposes, and that the record contains some limited suggestions that it could be a useful data point in the MLC's core project of matching works under the mechanical license. Without further information, the Office is reluctant to require the MLC to include such information, given the statutory prohibition against administering performance licenses and the MLC's suggestion that it needs to focus on more core tasks. In addition, in a related rulemaking, the Office declined to require that musical work copyright owners provide information related to PRO affiliation in connection with the statutory obligation to undertake commercially reasonably efforts to deliver sound recording Start Printed Page 86811information to the MLC.^[110] Given that the MLC intends to source musical work information from copyright owners or administrators, requiring the MLC to “pass through” PRO affiliation from DMPs may potentially be confusing as to the source of such information or result in incorrect or conflicting information. After the MLC has been up and running, the Office is willing to consider whether modifications to the interim rule prove necessary on this subject. In the meantime, as previously noted by the Office, not requiring the MLC to include PRO affiliation does not inhibit the MLC from optionally including such information.^[111] Should the MLC decide to include PRO affiliation in the database and source such information from DMPs' reports of usage, the Office encourages the MLC to include an explanation of PRO affiliation and the sourcing of such information in its glossary.

7. Historical Data

In response to the September NOI and April NOI, multiple commenters asserted that the public database should maintain and make historical ownership information available.^[112] For its part, the MLC stated its intention to “maintain information about each and every entity that, at any given point in time, owns a share of the right to receive mechanical royalties for the use of a musical work in covered activities,” and to “maintain at regular intervals historical records of the information contained in the database.” ^[113] The MLC confirmed that it “will maintain an archive of data provided to it after the license availability date (`LAD') and that has subsequently been updated or revised (e.g., where there is a post-LAD change in ownership of a share of a musical work), and the MLC will make this historic information available to the public.” ^[114] The MLC contends that “it should be permitted to determine, in consultation with its vendors, the best method for maintaining and archiving historical data to track ownership and other information changes in its database.” ^[115]

The proposed rule adopted the MLC's request for flexibility as to the most appropriate method for archiving and maintaining historical data to track ownership and other information changes in the database, stating that the MLC shall maintain 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.^[116] No commenters objected to this aspect of the proposed rule. The Office continues to believe that granting the MLC discretion in how to display such historical information is appropriate, particularly given the complexity of ownership information for sound recordings (discussed below). Accordingly, the interim rule adopts this aspect of the proposed rule without modification. As previously noted by the Office, the MLC must maintain all material records of the operations of the mechanical licensing collective in a secure and reliable manner, and such information will also be subject to audit.^[117] CISAC & BIEM did seek clarity on whether the database will include historical information for both musical works and sound recordings.^[118] The Office confirms that the interim rule broadly covers information changes in the database, which covers information relating to both musical works and sound recordings.

8. Terminations

Title 17 allows authors or their heirs, under certain circumstances, to terminate an agreement that previously granted one or more of the author's exclusive rights to a third party.^[119] In response to the September NOI, one commenter suggested that to the extent terminations of musical work grants have occurred, the public database should include “separate iterations of musical works with their respective copyright owners and other related information, as well as the appropriately matched recording uses for each iteration of the musical work, and to make clear to the public and users of the database the appropriate version eligible for future licenses.” ^[120] Separately, as addressed in a parallel rulemaking, the MLC asked that the Office require digital music providers to include server fixation dates for sound recordings, contending that this information will be helpful to its determination whether particular usage of musical works is affected by the termination of grants under this statutory provision.^[121] The DLC objected to this request.^[122]

In the April NOI, the Office sought public input on issues that should be considered relating to whether termination information should be included in the public database.^[123] The DLC, SGA & SCL, and SONA support including information concerning the termination of grants of rights by copyright creators in the public database.^[124] By contrast, the MLC contended that it “should not be required to include in the public database information regarding statutory termination of musical works per se.” ^[125] The Recording Academy asked the Office to “set aside any issue related to termination rights and the MLC until it conducts a full and thorough examination of the implications . . . for songwriters and other authors, including an opportunity for public comment.” ^[126]

The proposed rule did not require the mechanical licensing collective to include termination information in the public database, an approach that is adopted by the interim rule.^[127] While in response to the NPRM, SGA & SCL reiterate their viewpoint that this information should be required, at this time, the Office is not convinced this requirement is necessary in light of the statutory obligation to maintain an up-to-date ownership database.^[128] Indeed, Start Printed Page 86812the MLC has noted its intention to include information regarding administrators that license musical works and/or collect royalties for such works,^[129] as well as information regarding “each and every entity that, at any given point in time, owns a share of the right to receive mechanical royalties for the use of a musical work in covered activities,” ^[130] which presumably should include updated ownership information that may be relevant for works that are being exploited after exercise of the termination right. The Office's conclusion does not restrict the MLC from optionally including such information.

9. Data Provenance

In response to both notifications of inquiry, commenters overwhelmingly supported having the public musical works database include data provenance information.^[131] The DLC and SoundExchange contend that including data provenance information will allow users of the database to make their own judgments as to its reliability.^[132] Others noted that for sound recordings, first-hand data is more likely to be accurate.^[133] For its part, the MLC maintains that it “should be given sufficient flexibility to determine the best and most operationally effective way to ensure the accuracy and quality of the data in its database, rather than requiring it to identify the source of each piece of information contained therein.” ^[134] The MLC also stated that it “intends to show the provenance of each row of sound recording data, including both the name of and DPID for the DMP from which the MLC received the sound recording data concerned,” and that it “intends to put checks in place to ensure data quality and accuracy.” ^[135] For musical works information, the MLC maintains that it “will be sourced from copyright owners.” ^[136]

The proposed rule would require the MLC to include data provenance information for sound recording information in the public database, though it grants the MLC some discretion on how to display such information.^[137] The proposed rule would not require the MLC to include data provenance information for musical work information, as the MLC intends to source musical works information from copyright owners (which commenters generally supported).^[138] Specifically, the Office noted that “data provenance issues appear to be especially relevant to sound recording information in the public database,” particularly “given that the MLC intends to populate sound recording information in the public database from reports of usage, as opposed to using a single authoritative source.” ^[139] The Office sought public input on this aspect of the proposed rule.^[140]

ARM and SoundExchange both ask for regulations to require the MLC to identify the actual person or entity from which the information came, as opposed to including a categorical description such as “digital music provider” or “usage report,” though ARM does “not oppose inclusion of those sorts of descriptors along with the party name.” ^[141] In addition, ARM and CISAC & BIEM contend that the database should also include data provenance information regarding musical works information, with ARM stating that data provenance information for musical works “would be of similar benefit to users of the database, particularly those who are required to pay mechanical royalties outside of the blanket license.” ^[142] For its part, the MLC “confirmed that it will include in the database DMP names and DPID information where it receives it.” ^[143] Accordingly, the interim rule states that for sound recording information received from a digital music provider, the MLC shall include the name of the digital music provider. Because the MLC has stated that it will source musical work information from copyright owners and administrators of those works, and because (as noted above) copyright owners and administrators will already be included in the database, the Office concludes at this time that the regulations do not need to require data provenance information for musical works. Should future instances of confusion suggest that modifications to the interim rule are necessary, the Office is willing to reconsider this subject. The interim rule does not dictate the precise format in which such information is made available in the database.^[144]

C. Sound Recording Information and Disclaimers or Disclosures in the Public Musical Works Database

1. “Sound Recording Copyright Owner” Information

In response to the September NOI, RIAA and individual record labels expressed concern about which information will populate the database and be displayed to satisfy the statutory requirement to include “sound recording copyright owner” (SRCO) in the public musical works database.^[145] Specifically, RIAA explained that under current industry practice, digital music providers send royalties pursuant to information received from record companies or others releasing recordings to DMPs “via a specialized DDEX message known as the ERN (or Electronic Release Notification),” which “is typically populated with information about the party that is entitled to receive royalties (who may or may not be the actual legal copyright owner), because that is the information that is relevant to the business relationship between record labels and DMPs.” ^[146] In short, information “in the ERN message is not meant to be used to make legal determinations of ownership.” ^[147] RIAA noted the Start Printed Page 86813potential for confusion stemming from a field labelled “sound recording copyright owner” in the public database being populated by information taken from the labels' ERN messages—for both the MLC (i.e., the MLC could “inadvertently misinterpret or misapply the SRCO data”), and users of the free, public database (i.e., they could mistakenly assume that the so-called “sound recording copyright owner” information is authoritative with respect to ownership of the sound recording).^[148] Relatedly, SoundExchange noted that it “devotes substantial resources” to tracking changes in sound recording rights ownership, suggesting that inclusion of a SRCO field “creates a potential trap for the unwary.” ^[149] A2IM & RIAA and Sony suggested that three fields—DDEX Party Identifier (DPID), LabelName, and PLine—may provide indicia relevant to determining sound recording copyright ownership.^[150]

In the April NOI, the Office sought public comment regarding which data should be displayed to satisfy the statutory requirement, including whether to require inclusion of multiple fields to lessen the perception that a single field contains definitive data regarding sound recording copyright ownership.^[151] In response, ARM did not object “to a regulation that requires the MLC to include [DDEX Party Identifier (DPID), LabelName, and PLine] in the Database, provided the fields are each labeled in a way that minimizes confusion and/or misunderstanding,” as “this will lessen the perception that a single field contains definitive data regarding sound recording copyright ownership information.” ^[152] For DPID, the Office understands that ARM does not object to including the DPID party's name, but does “object to the numerical identifier being disclosed, as the list of assigned DPID numbers is not public and disclosing individual numbers (and/or the complete list of numbers) could have unintended consequences.” ^[153] The MLC “ha[d] no issue with including LabelName and PLine information in the public database to the extent the MLC receives that information from the DMPs,” but expressed concern about including DPID because it “does not identify sound recording copyright owner, but rather, the sender and/or recipient of a DDEX-formatted message.” ^[154] The DLC stated that LabelName and Pline “are adequate on their own,” as DPID “is not a highly valuable data field,” and contended that the burden of converting DPID numerical codes into parties' names (to address ARM's concern about displaying the numerical identifier) outweighs any benefit of including DPID in the public database.^[155] The Recording Academy, although acknowledging that “DDEX ERN information is an important source of reliable and authoritative data about a sound recording,” asserted that “many of the fields serve a distinct purpose in the digital supply chain and do not satisfy the `sound recording copyright owner' field required in the MLC database.” ^[156]

The proposed rule tentatively concluded that DPID does not have as strong a connection to the MLC's matching efforts or the mechanical licensing of musical works as the other fields identified as relevant to the statutory requirement to list a sound recording copyright owner. In light of this, and the commenters' concerns, the proposed rule did not require the MLC to include DPID in the public database. In case the MLC later chooses to include DPID in the public database, the proposed rule states that the DPID party's name may be displayed, but not the numerical identifier. In addition, because industry practice has not included a single data field to provide definitive data regarding sound recording copyright ownership, to satisfy the statute's requirement to include information regarding “sound recording copyright owner,” the proposed rule requires the MLC to include data for both LabelName and PLine in the public database, to the extent reasonably available.^[157] In light of numerous comments expressing similar views, the Office tentatively concluded that inclusion of these two fields would adequately satisfy the statutory requirement by establishing an avenue for the MLC to include relevant data that is transmitted through the existing digital supply chain, and thus reasonably available for inclusion in the public database.^[158]

Regarding labeling, the Office tentatively declined to regulate the precise names of these fields,^[159] although the proposed rule precluded the MLC from labeling either the PLine or LabelName field “sound recording copyright owner,” and required the MLC to consider industry practices Start Printed Page 86814when labeling fields in the public database to reduce the likelihood of user confusion.^[160] The Office also expressed appreciation that the MLC intends to “make available in the database a glossary or key, which would include field descriptors.” ^[161] The Office specifically encouraged “the MLC to consider ARM's labeling suggestions with respect to the PLine and LabelName fields.” ^[162] The Office strongly disagreed with the MLC's notion that “the names or labels assigned to these fields in the public database is not ultimately the MLC's decision,” and that “it is ultimately at DDEX's discretion.” ^[163] The Office explained that “[w]hile DDEX `standardizes the formats in which information is represented in messages and the method by which the messages are exchanged' `along the digital music value chain' (e.g., between digital music providers and the MLC), DDEX does not control the public database or how information is displayed and/or labeled in the public database.” ^[164]

The Office received no comments in opposition to this aspect of the proposed rule. In response, ARM agreed with the Office's decision to include LabelName and PLine in the public database, prohibit the MLC from labeling either field “sound recording copyright owner,” and require that the MLC “consider industry practices when labeling fields in the public database to reduce the likelihood of user confusion.” ^[165] ARM also reiterated its labeling suggestions for the PLine and LabelName fields.^[166] Similarly, SoundExchange “welcome[d]” the Office's approach of prohibiting the MLC from identifying either the PLine or LabelName field as the “Sound Recording Copyright Owner,” and directing the MLC to consider industry practices when labeling fields in the public database to reduce the likelihood of user confusion.^[167]

Given the overwhelming support expressed in the comments, and for all of the reasons given in the NPRM, the interim rule adopts this aspect of the proposed rule without modification.

2. Disclaimer

Relatedly, the Office received persuasive comments requesting that the MLC be required to include a conspicuous disclaimer regarding sound recording copyright ownership information in its database. ARM, A2IM & RIAA, CISAC & BIEM, Recording Academy, and SoundExchange agreed that the public database should display such a disclaimer.^[168] And the MLC itself has agreed to display a disclaimer that its database should not be considered an authoritative source for sound recording ownership information.^[169]

The proposed rule would require the MLC to include in the public-facing version of the musical works database a conspicuous disclaimer that states that the database is not an authoritative source for sound recording ownership information, and explains the labeling of information in the database related to sound recording copyright owner, including the “LabelName” and “PLine” fields. The proposed rule would not require that the disclaimer include a link to SoundExchange's ISRC Search database.

The proposed rule was largely supported, and is now adopted without modification.^[170] Because the MLC intends to populate the public musical works database with sound recording information from reports of usage (discussed below), ARM did suggest that the disclaimer “explain that the sound recording data displayed in the database has been provided by users of the sound recordings, not by the owners or distributors of the sound recordings,” and that “MLC require users to click on the disclaimer to acknowledge that they have seen and accepted it.” ^[171] SoundExchange agrees, noting that it is “critically important the MLC's disclaimer concerning sound recording information be clear and prominent, and perhaps linked to a more detailed explanation of the issue, because this design decision carries a significant risk of confusing the public, which needs to understand what the MLC Database is and what it is not.” ^[172] For its part, the MLC believes having the disclaimer state that sound recording information has been provided by users of the sound recordings “may be confusing to the public, as sound recording information reported by DMPs will largely be the data provided by the respective record labels.” ^[173]

Given that the proposed rule requires the MLC to include a conspicuous disclaimer that states that the database is not an authoritative source for sound recording ownership information, and explain the labeling of information related to sound recording copyright owner, including the “LabelName” and “PLine” fields, the Office adopts this aspect of the proposed rule without modification. The Office endorses SoundExchange's suggestion that the MLC consider providing a more detailed explanation of the issue, and also notes that the rule does not prohibit the MLC from linking to SoundExchange's ISRC Search database.

3. Populating and Deduplication of Sound Recording Information in the Public Musical Works Database

The statute requires the MLC to “establish and maintain a database containing information relating to musical works (and shares of such works) and, to the extent known, . . . the sound recordings in which the musical works are embodied.” ^[174] As noted above, for both matched and unmatched musical works, the public database must include, to the extent reasonably available to the MLC, “identifying information for sound recordings in which the musical work is embodied.” ^[175]

As discussed in the NPRM, throughout this and parallel rulemakings, “commenters have expressed concern about the MLC using non-authoritative sources to populate the sound recording information in the public database.” ^[176] Some commenters, including several representing recorded music interests, maintained that sound recording data in the public database should be taken from copyright owners or an authoritative source (e.g., SoundExchange) rather than DMPs.^[177] Start Printed Page 86815Though raised in the context of data collection by DMPs, as opposed to populating the public database, the DLC supported the MLC obtaining sound recording information from a single, authoritative source, such as SoundExchange, because “[w]ith record labels acting as the primary and authoritative source for their own sound recording metadata, the MLC could then rely on only a single (or limited number of) metadata field(s) from licensees' monthly reports of usage to look up the sound recordings in the MLC database (e.g., an ISRC or digital music provider's unique sound recording identifier that would remain constant across all usage reporting).” ^[178] The DLC further maintained that “the MLC's suggestion to obtain disparate sound recording data from every digital music provider and significant non-blanket licensee is far less efficient than obtaining it from a single source like SoundExchange.” ^[179]

By contrast, the MLC stated that while it intends to use SoundExchange as one source of data about sound recordings, it intends to primarily rely on data received from DMPs to populate sound recording information in the database.^[180] The MLC added that receiving unaltered sound recording data from DMPs, as it sought to have required in a separate proceeding, would “both improve the MLC's ability to match musical works to sound recordings” and “better allow the MLC to `roll up' sound recording data under entries that are more likely to reflect more `definitive' versions of that sound recording data.” ^[181]

The NPRM invited the MLC to reassess how it will populate sound recording information in the public database, noting commenters' concerns about using non-authoritative sources, and that adopting a requirement for DMPs to report unaltered sound recording data fields need not drive display considerations with respect to the public database.^[182] The Office stated that “the MMA anticipates a general reliability of the sound recording information appearing in the public database,” ^[183] and that “[w]hile it may be true that reports of usage are the better indicators of which sound recordings were actually streamed, the public database is not necessarily meant to serve that same function.” ^[184] The statute requires the public database to contain information relating to “the sound recordings in which the musical works are embodied,” which can reasonably be read as information to identify the sound recordings in which musical works are embodied, regardless of whether they were streamed pursuant to disparate attendant metadata or not.^[185] In the NPRM, the Office also noted the potential that by passing through inaccurate or confusing sound recording information received by DMPs in the database, such inaccuracies or confusion in the public database could translate into inaccuracies in royalty statements to musical work copyright owners.^[186] Further, because the statute requires the MLC to grant free bulk-access to digital music providers, such access “seems less meaningful if [it] were to mean regurgitating the same information from reports of usage back to digital music providers.” ^[187] While the proposed regulatory language did not address the manner in which the MLC populates sound recording information in the database or the deduplication of sound recording records (i.e., eliminating duplicate or redundant sound recording records), the Office invited further comment on these issues.^[188]

In response, though commenters did not express additional concerns about the MLC's plans to populate sound recording information in the database, SoundExchange did note that “the MLC's reluctance to include and organize its data around authoritative sound recording information . . . represents a missed opportunity to develop a resource with authoritative linkages between sound recordings and musical works that would be of significantly greater value for participants in the ecosystem.” ^[189] The MLC stated that because the database is “musical works-driven,” “it should be populated in such a way to assist owners of musical works in identifying uses of their works by DMPs so they can be paid royalties to which they are entitled.” ^[190] The MLC maintains that “normalizing” sound recording data “may be useful to sound recording copyright owners, but that neither serves the primary purpose of the MMA nor necessarily helps musical work copyright owners.” ^[191] Rather, the MLC asserts, “there could be hundreds of different recorded versions of a popular musical work . . . , including cover versions, live versions, and remastered versions,” and the musical work copyright owner “wants to see in the database all of those hundreds of different recordings associated with its musical work when it searches for that musical work, and it also wants to see all of the uses by the different DMPs of each of those different recordings because it is to be paid for each such use.” ^[192] The MLC added that, given the requirement for DMPs to provide data unaltered from what they receive from labels, “that means that the data the MLC receives from the DMPs will itself be `authoritative' because it comes from the labels.” ^[193]

The Office appreciates comments from the various parties on these issues. The interim rule adopts the proposed flexible approach for the MLC to determine the best way to populate the database and display sound recording information. The Office notes, however, that achieving the purpose of the database (i.e., reducing the number of unmatched musical works by accurately identifying musical work copyright owners so they can be paid what they are owed by DMPs operating under the section 115 statutory license) requires accurate information to be presented to musical work copyright owners (and the public) in a user-friendly and meaningful manner. Should a copyright owner be confronted with thousands of entries of the identical sound recording in the database (as opposed to numerous, but different, sound recordings embodying the musical work) that are not linked or associated, and each entry represents a single use of a sound recording instead of its identity, the Office questions the meaningfulness of such information. The Office is thus encouraged that MLC will work to use unaltered data “after it begins to receive it in September 2021” “as `keys' to `roll up' into one set of Start Printed Page 86816metadata different sound recording metadata reported by DMPs in usage reports for an identical sound recording.” ^[194] If, after the MLC starts receiving unaltered data from DMPs, it proves appropriate to develop more specific regulatory guidance, the Office is amenable to reconsideration. As even the MLC has acknowledged, sound recording information may be helpful for matching purposes,^[195] so its inclusion does not serve only sound recording owners.

D. Access to Information in the Public Musical Works Database

As noted above, the statute directs the Office to “establish requirements by regulations to ensure the usability, interoperability, and usage restrictions of the [public] musical works database.” ^[196] The database must “be made available to members of the public in a searchable, online format, free of charge.” ^[197] The mechanical licensing collective must make the data available “in a bulk, machine-readable format, through a widely available software application,” to digital music providers operating under valid notices of license, compliant significant nonblanket licensees, authorized vendors of such digital music providers or significant nonblanket licensees, and the Office, free of charge, and to “[a]ny other person or entity for a fee not to exceed the marginal cost to the mechanical licensing collective of providing the database to such person or entity.” ^[198] The legislative history stresses the importance of the database and making it available to “the public without charge, with the exception of recovery of the marginal cost of providing access in bulk to the public.” ^[199] It adds that “[i]ndividual lookups of works shall be free although the collective may implement reasonable steps to block efforts to bypass the marginal cost recovery for bulk access if it appears that one or more entities are attempting to download the database in bulk through repeated queries.” ^[200] And “there shall be no requirement that a database user must register or otherwise turn over personal information in order to obtain the free access required by the legislation.” ^[201]

1. Method of Access

The proposed rule required the MLC to “make the musical works database available to members of the public in a searchable, real-time, online format, free of charge.” ^[202] The Office agreed that the MLC should—especially initially, due to its start-up nature—have some discretion regarding the precise format in which it provides bulk access to the public database.^[203] Given, however, “the overwhelming desire for the MLC to provide bulk access through APIs from a broad swatch of organizations representing various corners of the music ecosystem,” the Office proposed that the MLC must begin providing bulk access to the public database through APIs starting July 1, 2021.^[204]

The proposed rule was applauded by commenters.^[205] The MLC stated its intention to provide bulk access through an API as proposed, but raised concerns regarding implementation by July 1, 2021.^[206] It noted in particular that it “will not be able to commence the work to develop the API until after it has begun issuing royalty statements in the Spring of 2021” and requested that the deadline be extended to December 31, 2021 “to ensure sufficient development time.” ^[207] The MLC asks for the extension “to allow time to conduct proper consultation with stakeholders throughout the industry regarding their requirements, gather their feedback, and then design, test and implement, so as to provide the most useful API,” but did indicate that “it will aim to implement API access sooner in 2021 where that is reasonably practical.” ^[208] In the meantime, the MLC will be “providing access through Secure File Transfer Protocol (SFTP) on a weekly basis,” which is “expected to be available by January 2021.” ^[209] Because the proposed rule requires the MLC to provide bulk access in a “real-time” format, the MLC asks that the rule be adjusted to delete the words “real-time.” ^[210]

After carefully considering this issue, the Office agrees that having time to seek industry feedback while developing an API increases the chances of developing one that meets the needs of industry participants. Accordingly, the interim rule provides the MLC until December 31, 2021 to implement bulk access through an API. The Office declines, however, to remove the words “real-time” from the rule. The Office raised the issue of “real-time” access in response to the DLC's initial proposal that bulk access be provided through a weekly file, and multiple commenters objected, asserting that real-time access to the public database is necessary to meet the goals of the statute and avoid industry reliance upon stale data.^[211] Given the regulation, the Office thus encourages the MLC to consider offering bulk access via SFTP on a more frequent basis until the API is available.

Next, MAC requests that the regulations require the MLC to provide songwriters with “access to the same level of certain data as . . . publishers, digital music providers, labels, etc., free of charge.” ^[212] Specifically, MAC proposed that any songwriter who has authored or co-authored any musical work should have access “to the following information at the same time it is provided to the publisher or administrator of record”: (1) The amount of revenue each DSP has paid to the MLC for the work, (2) the amount of revenue the MLC has paid to the respective publisher or administrator, and (3) the total stream count of each work per DSP.^[213]

When asked about songwriter access, the MLC made some overtures towards ensuring songwriter access for purposes of correcting data. The MLC confirmed that “the public musical works database will be viewable by the general public Start Printed Page 86817without any need to register for the MLC Portal,” as the portal “is the platform for copyright owners and administrators of musical works used in covered activities, where they can register their works, claim their shares and provide the necessary information so as to receive royalty distributions.” ^[214] The MLC also noted that “everyone, including songwriters, may participate in the DQI.” ^[215] Finally, the MLC said that it intends “to develop user-friendly methods for songwriters to access information about their musical works and to enable songwriters to notify their administrators of a possible issue with a work's data or registration.” ^[216]

Providing songwriters with the ability to review and correct information about their works is important, but the Office also believes that transparency militates in favor of affording songwriters (including those who are not self-published) easier access to information about use of their works. The Office appreciates the MLC's commitment to developing user-friendly methods for songwriters, specifically, to access information about their works. The Office further notes that nothing prevents the MLC from working with publishers and administrators to offer non-self-administered songwriters permissions-based access to view stream count and revenue information for their musical works, and encourages the MLC to explore such options.^[217]

2. Marginal Cost

The Office proposed to allow the MLC to determine the best pricing information in light of its operations, so long as the fee does not exceed the marginal cost to the mechanical licensing collective of providing the database to such person or entity, which shall not be unreasonable.^[218] In rejecting comments suggesting that the cost of gathering data should be factored into these costs, the NPRM stated “it [was] difficult for the Office to see how Congress intended third parties to offset the larger cost of the collective acquiring the data and aggregating, verifying, deduping and resolving conflicts in the data.” ^[219] The Office also noted that the legislative history emphasizes the importance of accessibility to the public database, and that requiring third parties to pay more than the “marginal cost” could create commercial disadvantages that the MMA sought to eliminate.^[220]

In response, an anonymous commenter stated that the term “marginal cost” is vague and should be defined “by either establishing a monetary limit or a method for the mechanical licensing collective to determine the amount.” ^[221] The MLC expressed concern that the phrase “which shall not be unreasonable” “is inconsistent with the requirement that access be provided at `marginal cost' because, if access is provided at `marginal cost,' such cost can never be `unreasonable,'” and that “the qualifier opens the door to a third party argument that what is, in fact, marginal cost is nevertheless `unreasonable' cost.” ^[222] The MLC does not believe “marginal cost” “authoriz[es] fees to recoup the overhead costs of design and maintenance of the SFTP or API,” but rather would “be set at an amount estimated to recoup the actual cost of provision of the bulk data to the particular person or entity requesting it.” ^[223] Currently, it estimates the SFTP bulk access to cost approximately $100 “to cover one-time setup and a single copy of the database, and a monthly standard fee of $25 which offers access to all weekly copies” (though “these expected fees may change, as [the MLC] has no precedent for this access and [associated] costs”).^[224] The MLC also confirmed that “it intends to charge the same fee to all members of the public (who are not entitled to free access) for SFTP access,” though “it expects API access would be under a different fee structure and amounts than SFTP access, since the marginal costs will be different.” ^[225]

After considering the MLC's comments, including its stated plans, the Office agrees that the phrase “which shall not be unreasonable” can be deleted from the rule.^[226] This aspect of the proposed rule is otherwise adopted without modification.

3. Abuse

The legislative history states that in cases of efforts by third parties to bypass the marginal cost recovery for bulk access (i.e., abuse), the MLC “may implement reasonable steps to block efforts to bypass the marginal cost recovery for bulk access if it appears that one or more entities are attempting to download the database in bulk through repeated queries.” ^[227] The MLC and DLC suggested providing the mechanical licensing collective discretion to block third parties from bulk access to the public database after attempts to bypass marginal cost recovery.^[228]

In light of these comments, the NPRM proposed that the MLC shall establish appropriate terms of use or other policies governing use of the database that allows it to suspend access to any individual or entity that appears, in the collective's reasonable determination, to be attempting to bypass the MLC's right to charge a fee to recover its marginal costs for bulk access through repeated queries, or to otherwise be engaging in unlawful activity with respect to the database (including, without limitation, seeking to hack or unlawfully access confidential, non-public information contained in the database), or misappropriating or using information from the database for improper purposes. To ensure transparency regarding which persons or entities have had bulk database access suspended, the Office also proposed to require the mechanical licensing collective to identify such persons and entities in its annual report and explain the reason(s) for suspension.Start Printed Page 86818

In response, while ARM “wholeheartedly support[s] giving the MLC the authority to suspend database access for individuals or entities that appear to be engaging in unlawful activity,” it expresses concern about terms of use or restrictions “inadvertently disadvantag[ing] bona fide users of the database or creat[ing] unintended barriers to legitimate uses of the data,” and encouraged the Office to consider an appeals process for those whose access the MLC seeks to suspend or restrict, or “some sort of graduated sanctions regime, whereby repeat offenders are subjected to increasingly stringent penalties while inadvertent, or one-time, offenders are subjected to less stringent penalties.” ^[229] On the other hand, the MLC “strongly opposes any change to the rule that would prevent the MLC from restricting access to users who have violated the terms of use, which could impede the MLC's ability to prevent fraud and abuse.” ^[230] The MLC stated “that it will have terms of use for the website, the Portal, and the bulk access to the musical works database,” noting that the “current version of the website Terms of Use is accessible at https://www.themlc.com/​terms-use. ^[231]

After considering this issue, the Office has largely adopted this aspect of the proposed rule without modification. The Office agrees that the MLC should have flexibility to block third parties where persons have engaged in unlawful activity with respect to the database and that in the cases of fraud the MLC may need to take immediate action. The Office encourages the MLC, however, in developing its terms of use for the database, to create an appeals process for those who have had access suspended to reduce the likelihood of good-faith users being denied access. Should the MLC fail to create an appeals process and the Office learns of individuals or entities being unreasonably denied access to the database, the Office is willing to consider whether further regulatory action on this issue is warranted.

4. Restrictions on Use

The MMA directs the Office to issue regulations regarding “usage restrictions” with respect to the database.^[232] Comments have been mixed in response to the Office's solicitations on this issue, generally centering around whether the Office should specify conditions the MLC should or should not include in its database terms of use.

The DLC argues that “licensees should be able use the data they receive from the MLC for any legal purpose,” ^[233] and that “abusive access can be adequately addressed by empowering the MLC to block efforts to bypass marginal cost recovery.” ^[234] Music Reports agrees that data in the public database should be available for any legal use.^[235] By contrast, CISAC BIEM seek “regulations defining strict terms and conditions, including prohibition for DMPs to use data for purposes other than processing uses and managing licenses and collaborating with the MLC in data collection,” and generally “prohibiting commercial uses and allowing exclusively lookup functions.” ^[236] FMC is “inclined to want to see some reasonable terms and conditions” regarding use of the public database, and suggests that “[i]t's entirely appropriate for the Office to offer a floor.” ^[237]

The MLC agrees that “there should be some reasonable limitation on the use of the information in the MLC database to ensure that it is not misappropriated for improper purposes,” and intends to “include such limitation in its terms of use in the database.” ^[238] To avoid abuse by bad actors, the MLC “does not intend to include in the public database the types of information that have traditionally been considered PII, such as Social Security Number (SSN), date of birth (DOB), and home address or personal email (to the extent those are not provided as the contact information required under 17 U.S.C. 115(d)(3)(E)(ii)(III)),” and “further intends to protect other types of PII.” ^[239] But the MLC also asks that it “be afforded the flexibility to disclose information not specifically identified by statute that would still be useful for the database but would not have serious privacy or identity theft risks to individuals or entities.” ^[240]

As noted, the Office proposed requiring the MLC to establish appropriate terms of use or other policies governing use of the database that allow it to suspend access to any individual or entity that appears, in the MLC's reasonable determination, to be engaging in unlawful activity with respect to the database (including, without limitation, seeking to hack or unlawfully access confidential, non-public information contained in the database) or misappropriating or using information from the database for improper purposes. The MLC must identify any persons and entities in its annual report that have had database access suspended and explain the reason(s) for such suspension. In issuing the proposed rule, the Office also noted that “database terms of use should not be overly broad or impose unnecessary restrictions upon good faith users.” ^[241]

The MLC states “that it will have terms of use for the website, the Portal, and the bulk access to the musical works database,” and that the “current version of the website Terms of Use is accessible at https://www.themlc.com/​terms-use. ^[242] In reviewing the MLC's terms of use for its website, the Office notes that multiple provisions would not be appropriate to apply to the public musical works database, and so the Office directs the MLC to develop separate terms of use for the database and make them publicly available. For example, the terms of use for the MLC's website states that that a user may “not download, reproduce, redistribute, retransmit, publish, resell, distribute, publicly display or otherwise use or exploit any portion of the website in any medium without The MLC's prior written authorization,” and that “any use . . . of any of The MLC Materials and website other than for [ ] personal use is strictly prohibited.” ^[243] In addition, the website's terms of use state that “[t]he website, including all content . . . are owned and/or licensed by The MLC and are legally protected.” ^[244] Use of information from the musical works database for commercial purposes would not be misappropriating or using that information for an improper purpose, and the MLC and its vendors do not own the data in the musical Start Printed Page 86819works database. Accordingly, while the Office is adopting its proposed approach of providing the MLC flexibility to develop reasonable terms of use, the interim rule clarifies the Office's expectation that the MLC's terms of use or other policies governing use of the database must comply with the Office's regulations.

E. Transparency of MLC Operations; Annual Reporting

The legislative history and statute envision the MLC “operat[ing] in a transparent and accountable manner” ^[245] and ensuring that its “policies and practices . . . are transparent and accountable.” ^[246] The MLC has expressed its commitment to transparency, both by including transparency as one of its four key principles underpinning its operations on its current website,^[247] and in repeated written comments to the Office.^[248] The Office has noted that one main avenue for MLC transparency is through its annual report.^[249] By statute, the MLC must publish an annual report “[n]ot later than June 30 of each year commencing after the license availability date,” setting forth information regarding: (1) Its operational and licensing practices; (2) how royalties are collected and distributed; (3) budgeting and expenditures; (4) the collective total costs for the preceding calendar year; (5) its projected annual budget; (6) aggregated royalty receipts and payments; (7) expenses that are more than ten percent of the annual budget; and (8) its efforts to locate and identify copyright owners of unmatched musical works (and shares of works).^[250] The MLC must deliver a copy of the annual report to the Register of Copyrights and make this report publicly available.^[251] The MLC itself has previously recognized that its annual report is one way in which it intends to “promote transparency.” ^[252] Although the phrase “[n]ot later than June 30 of each year commencing after the license availability date” could be read as requiring the first annual report to cover the first year of operations after the license availability date (i.e., issued in June 2022 for year 2021), as discussed below, a number of reasons compel the Office to adjust the interim rule to require the MLC to issue a written public update in December 2021, albeit shortened, regarding its operations.

In response to overwhelming desire for increased transparency regarding the MLC's activities expressed by commenters, and the ability of the annual report to provide such transparency, the proposed rule required the MLC to disclose certain information in its annual report besides the statutorily-required categories of information.^[253] In response to comments suggesting the creation of a “feedback loop” to receive complaints,^[254] the Office noted that the statute already requires the mechanical licensing collective to “identify a point of contact for publisher inquiries and complaints with timely redress.” ^[255] The proposed rule emphasized this responsibility by codifying the requirement and expanding it to include a point of contact to receive complaints regarding the public musical works database and/or the collective's activities.^[256] The name and contact information for the point of contact must be made prominently available on the MLC's website.^[257] In addition, the Office noted that it “always welcomes feedback relevant to its statutory duties or service,” and that “[m]embers of the public may communicate with the Office through the webform available https://www.copyright.gov/​help for inquiries or comments with respect to the MLC or MMA.^[258]

Commenters overall approved of the proposed rule.^[259] The MLC “generally agree[d] with the proposed rules as they concern annual reporting, and believes that the Office's additions to what is required in the statute . . . will aid in providing the transparency that the MMA envisions and that the MLC is committed to providing.” ^[260] The DLC similarly voiced support, adding, “[i]t will be critical, however, for the Office to enforce not just the bare letter of the regulations, but the spirit of full transparency that animates those regulations.” ^[261] Two commenters commended the Office for requiring disclosure of any application of unclaimed royalties on an interim basis to defray current collective total costs, as permitted under the MMA, “subject to future reimbursement of such royalties from future collections of the assessment.” ^[262] MAC and the Recording Academy welcomed requirements to disclose the appointment and selection criteria of new board members,^[263] and the Recording Academy also applauded disclosure requirements for average Start Printed Page 86820processing and distribution times for distributing royalties, stating it `will promote accountability and hopefully give songwriters confidence in the new system.” ^[264]

A number of commenters sought broader disclosure requirements regarding the MLC's vendors hired to help administer the statutory license, expressing concern about their potential commercial advantage. For example, FMC stated that “Congress intended to encourage a healthy competitive marketplace for other kinds of licensing businesses and intermediaries,” and so “it's important that MLC's chosen vendors not be able to leverage their status with the MLC to advantage themselves in other business activities not covered under the MMA.” ^[265] SoundExchange similarly expressed concern about potential commercial advantage of MLC vendors, noting that Congress “intended to preserve a vibrant and competitive marketplace for intermediaries [besides the MLC] who provide other license administration services,” and this intent would be frustrated “[i]f the MLC's vendors were to receive an unfair advantage in the music licensing marketplace through means such as preferred access to digital music providers or referrals by the MLC for extrastatutory business opportunities in a manner not available to their competitors.” ^[266] SoundExchange proposes requiring the MLC to disclose additional vendor information, including “[a] description of all work performed by the existing vendors for the MLC in the previous year and the current year; [s]teps the MLC has taken and will take to ensure separation between the MLC and its vendors; and [s]teps the MLC has taken to ensure transferability of functions from one vendor to another, and an assessment of any risks to transferability that the MLC foresees.” ^[267] The DLC expresses similar concern about MLC vendors “gain[ing] a special competitive advantage in related marketplaces—such as the administration of voluntary licenses—merely by dint of their association with the collective responsible for licensing all mechanical rights in the United States.” ^[268] Finally, MAC recommends that “information regarding the selection of vendors should be made available prior to vendors being selected” to provide opportunity for interested parties to weigh in on potential vendors.^[269]

While not opposing general disclosure requirements relating to vendors, the MLC balks at disclosing “any performance reviews” of the MLC's vendors that are “performing materially significant technology or operational services related to the [MLC's] matching and royalty accounting activities.” ^[270] The MLC contends that “performance reviews might include sensitive or confidential information, including about individuals who work for any such vendor,” and requests that the rule instead “permit the MLC to summarize or extract the key findings of any reviews, and to include such summaries or extracts in the annual report rather than the full performance reviews themselves.” ^[271]

The Office appreciates the overwhelming desire from commenters to have the MLC's annual report include information about the performance and selection of its vendors. The Office accepts the MLC's representation that vendor performance reviews may include sensitive or confidential information. The interim rule thus retains the requirement that the MLC disclose the criteria used in deciding to select its vendors to perform materially significant technology or operational services, but adjusts the language so as to require summaries and key findings from any vendor performance reviews rather than the verbatim reviews. To address concerns of MLC vendors gaining an unfair competitive advantage by virtue of being MLC vendors, in a parallel rulemaking, the Office has proposed a rule prohibiting vendors of the MLC (as well as its agents, consultants, and independent contractors) from using confidential information for any purpose other than the ordinary course of their work for the MLC.^[272] In addition, the interim rule in this proceeding clarifies that agents, consultants, vendors, and independent contractors of the MLC must pay the marginal cost to acquire bulk access to the information in the musical works database for purposes other than the ordinary course of their work for the MLC. Beyond the requirements codified in this interim rule, the Office encourages the MLC to consider the commenters' requests for additional disclosure, including information about soliciting and choosing vendors in advance of any vendor selection, and engaging in the highest level of transparency consistent with operational realities and protection of confidential information.^[273]

Commenters recommended certain additional disclosures. CISAC BIEM suggest requiring publication of the MLC Dispute Resolution Committee's rules and procedures,^[274] as well as disclosure of the amount of unclaimed royalties received by the MLC ^[275] and any audits and their results of the MLC or blanket licensees.^[276] SoundExchange proposes that the annual report “include a certification by the MLC that it is in compliance with the statute's limitation that the collective may only administer blanket mechanical licenses and other mechanical licenses for digital distribution.” ^[277] SGA SCL express concern that the proposed rule did not reflect its request for the MLC annual report to include “an independent report by the board's music creator representatives on their activities in support of songwriter and composer interests, the handling of conflict-related problems by the board and its various controlled committees, and the issues of conflict that remain to be addressed and resolved.” ^[278] The DLC Start Printed Page 86821suggests that the Office “invit[e] comments on the MLC's annual reports, to get insight from a broad range of stakeholders both about whether the report fulfills the MLC's transparency obligations and whether it raises (or fails to raise) any issues related to the sound functioning of the mechanical licensing system.” ^[279]

After carefully considering these comments, the Office concludes that some suggestions are already addressed by the statute, and some may not need to be addressed by regulation. For example, the statute already requires the MLC to submit to periodic audits, which must be made publicly available.^[280] Likewise, the MLC's database will provide insight into the amount of unmatched usages reported to the MLC, as well as a mechanism for claiming such works. Similarly, as the statute prohibits the MLC from administering licenses apart from the mechanical license, requiring the MLC to certify that it is in compliance with the law appears unnecessary. The Office agrees it could be beneficial for the rules and procedures for the MLC's Dispute Resolution Committee to be made publicly available, and encourages their publication as soon as practicable given the MLC's obligation to have “transparent and accountable” policies and procedures.^[281] Though the interim rule, like the proposed rule, does not require an independent report from the board's music creator representatives, the Office reiterates its expectation that “the MLC . . . give voice to its board's songwriter representatives as well as its statutory committees, whether through its annual reporting or other public announcements.” ^[282] Songwriters on the MLC's board of directors are not a separate entity and should participate with other members of the board to represent and collectively address songwriter concerns and interests.

For its part, the MLC seeks modification of the proposed requirement to disclose “the average processing and distribution times for distributing royalties to copyright owners,” calling it “somewhat confusing.” ^[283] The MLC argues that “there are many different types of averages and methods of calculating averages, leaving room for misunderstanding,” and that “the rule should accommodate the inclusion in the annual report of the actual [ ] dates on which distributions were made to copyright owners during the preceding calendar year, as such information will inform copyright owners and other interest[ed] parties of the timeliness of payment.” ^[284] The MLC “intends to and will include in the annual report the dates on which distributions were made to copyright owners during the preceding calendar year, which will inform copyright owners and other interest parties of the timeliness of payment” and requests that the rule be modified to permit that information instead of “average processing and distribution times.” ^[285] The MLC suggests removing the word “average” as one possible solution.^[286]

The Office believes that the proposed rule would allow the MLC to determine and explain the metrics it relies upon when reporting processing and distribution times. Indeed, the Office itself reports a variety of average processing times for copyright registration, with accompanying explanatory methodology material.^[287] The MLC's core function is to collect and distribute royalties for covered activities; simply reporting the months in which the MLC distributes royalties—without disclosing how long the process of matching and distribution of royalties takes—provides limited meaningful insight into how the blanket license is functioning under the MLC's administration (including for example, by identifying external dependencies that may be contributing to delays in the MLC's ability to identify musical works embodied in particular sound recordings and identify and locate corresponding musical work copyright owners).^[288] Accordingly, this aspect of the interim rule retains the general requirement, but in order to avoid any confusion, clarifies that the MLC has discretion as to the metrics it measures when reporting average times by stating that the MLC must disclose the manner in which it calculates processing and distribution times.

Finally, as noted above, while the phrase “[n]ot later than June 30 of each year commencing after the license availability date” could be read as not requiring the first annual report until June 2022 (to cover year 2021), a number of reasons compel the Office to adjust the interim rule to require the MLC to issue a written public update regarding its operations in December 2021, in a potentially abbreviated version. Because the MLC was designated in July 2019,^[289] if the first annual report is issued in June 2022, that could mean three years without a formal written update on the MLC's operations. This may frustrate the noted desire from commenters for transparency regarding the MLC's operations.^[290] The Office is also mindful of the statutory five-year designation process for periodic review of the mechanical licensing collective's performance.^[291] Additional written information from the MLC may help inform both the Office's and the public's understanding with respect to that period of the MLC's performance. Finally, for musical works for which royalties have accrued but the copyright owner is unknown or not located, the Start Printed Page 86822MLC must hold such royalties until at least January 1, 2023.^[292] If the first written report were received in June 2022, that may provide a short runway for public disclosure and feedback prior to the MLC potentially “engag[ing] in diligent, good-faith efforts to publicize” “any pending distribution of unclaimed accrued royalties and accrued interest, not less than 90 days before the date on which the distribution is made.” ^[293] Accordingly, the interim rule requires the MLC to issue by no later than December 31, 2021 and make available online for a period of not less than three years, a one-time report that contains, at a minimum, many of the categories of information required to be disclosed in the MLC's annual report.

The Office recognizes that certain categories of information for the annual report may not be applicable for the first six months after the license availability date, as the MLC would not have engaged in certain activities (e.g., aggregated royalty receipts and payments). Accordingly, the interim rule states that if it is not practicable for the MLC to provide a certain category of information that is required for the MLC's annual report, the MLC may so state but shall explain the reason(s) for such impracticability and, as appropriate, may address such categories in an abbreviated fashion.

Start List of Subjects

List of Subjects in 37 CFR Part 210

• Copyright
• Phonorecords
• Recordings

End List of Subjects

Interim Regulations

For the reasons set forth in the preamble, the Copyright Office amends 37 CFR part 210 as follows:

Start Part

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

End Part Start Amendment Part

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

End Amendment Part Start Authority

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

End Authority Start Amendment Part

2. Add §§ 210.31 through 201.33 to read as follows:

End Amendment Part Start SignatureEnd Signature End Supplemental Information

Footnotes