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Federal Register / Vol. 86, No. 27 / Thursday, February 11, 2021 / Rules and Regulations While the Office appreciates that DMPs understandably want to ensure that sensitive business information provided to the MLC is not unlawfully or inappropriately disclosed or used, the definition of confidential information is already inclusive of information that is competitively sensitive as between digital music providers. Indeed, the DLC
itself states that this information plainly falls within the definition of Confidential Information in the Proposed Rule. 55 The Office believes that amending the language to define confidential information as including any sensitive data provided by digital music providers related to royalty calculations could be overly broad in light of various statutory transparency and disclosure obligations; the suggestion to include subscriber counts and service revenues may also overreach as some DMPs are public companies who already disclose this information in financial statements.56
The Office previously declined to adopt the DLCs proposed definition that included all the usage and royalty information reported by DMPs for this reason.57 Nonetheless, for clarity, the interim rule includes sensitive data provided by digital music providers related to royalty calculations in the enumeration of types of confidential information. As explained further below, however, the interim rule also separately addresses the DLCs concerns by imposing restrictions on disclosure of these types of information to MLC
board members and others involved with the operation of the mechanical license.
With respect to disclosure of information provided in royalty statements to copyright owners specifically, prior to the MMA, the Office previously considered and rejected the suggestion to place confidentiality requirements on copyright owners receiving statements of account under the section 115
statutory license due to the inclusion of competitively sensitive information, determining instead that once the statements of account have been delivered to the copyright owners, there should be no restrictions on the copyright owners ability to use the
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55 DLC

NPRM at 4.
e.g., Press Release, Spotify Technology S.A., Shareholder Letter Q4 2020 Feb. 3, 2021, https s22.q4cdn.com/540910603/files/doc_
financials/2020/q4/Shareholder-Letter-Q4-2020_
FINAL.pdf; Spotify Technology S.A, Form 6K
Report of Foreign Private Issuer 2020 https
s22.q4cdn.com/540910603/files/doc_financials/
2020/q3/69e72911-517a-47bb-ab3e1b1248654d1a.pdf.
57 85 FR at 22561.
56 See,
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statements or disclose their contents. 58
Royalty statements for the section 115
license have been provided to copyright owners for years without the confidentiality restrictions now requested by the DLC. No commenters provided examples of past harm caused by the existing regulations failing to impose such restrictions.59 Given that an animating goal of the MMA is to facilitate increased transparency and accuracy in reporting payments to copyright owners, the Office reiterates that it sees no compelling reason to deviate from this established policy.60
Further supporting the Offices conclusion that it should not depart from the status quo, the Offices adopted royalty payment and accounting information reporting requirements similarly essentially retain the current rule governing non-blanket section 115
licenses. 61 The Office is not persuaded by the DLCs suggestion that the statutory directive to promulgate regulations to avoid information in the records of the mechanical licensing collective being improperly disclosed or used counsels differently.62 Royalty statements are records of, and designed to be provided to, recipient copyright owners, and the statute and legislative history do not suggest that maintaining status quo expectations with respect to copyright owners receipt of royalty information would fall under the category of improper use.
Accordingly, the interim rule states that once a royalty statement has been delivered to a copyright owner, there are no restrictions on that copyright owners ability to use the statement or disclose its contents. The Office declines the MLCs proposal to exclude from the definition of confidential information, information concerning the calculation of the payable royalty pool 58 Id.; 79 FR 56190, 56206 Sept. 18, 2014; see SONA NPRM Comment at 3 Strongly endorsing the Copyright Offices rejection of any confidentiality restrictions on the use of royalty statements issued to copyright owners by the MLC.. The Office similarly declined to adopt the DLCs proposal that copyright owners and their designated agents could receive confidential information, so long as they sign an appropriate confidentiality agreement with the MLC. 85 FR at 22561; see DLC Ex Parte Letter 2 at 5; see DLC
Reply NOI Comment at 28; 37 CFR 380.5c3.
59 Similarly, the administrative record contains no indicia that direct, voluntary licensing typically include restrictions on the uses of information in royalty statements by copyright owners.
60 See 85 FR at 22561.
61 See 85 FR at 22529; 85 FR 58160, 58162 Sept.
17, 2020 This information is provided to copyright owners under the song-by-song license. It will continue to be reported by DMPs to the MLC
as part of their monthly reports of usage, and the MLC intends to pass along this information to copyright owner..
62 DLC NPRM at 4 citing 17 U.S.C. 115d12C.

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and the per-work royalty allocation under part 385 to be reported in royalty statements to copyright owners under 37 CFR 210.29c1vi. Instead, as discussed below, the rule states that the mechanical licensing collective shall be permitted to prepare and deliver royalty statements to musical work copyright owners and the contents therein in accordance with the Offices regulations governing royalty statements, which require a detailed and step-by-step accounting of the calculation of royalties under applicable provisions of part 385 of this title, sufficient to allow the copyright owner to assess the manner in which the royalty owed was determined and the accuracy of the royalty calculations, which shall include details on each of the components used in the calculation of the payable royalty pool. 63 This language is meant to clarify that despite the rules general restrictions on disclosing confidential information, the MLC is not prevented from preparing and delivering royalty statements to copyright owners. The rule clarifies, however, that royalty statements to copyright owners should not include confidential information that does not relate to the recipient copyright owner or relevant songwriter in addition to the minimum information required by the Offices regulations. As discussed more below, the Office believes the MLCs proposed language that the MLC and DLC may disclose confidential information to copyright owners, including their agents, whose works were used in covered activities, in connection with royalty payments and statements becomes unnecessary.
3. Information Disclosed by Digital Music Providers, Copyright Owners, and Third Parties The MLC and FMC suggest that the proposed rules definition of confidential information is too broad.64 Specifically, the MLC contends the definition is not limited to information exchanged in connection with the MLCs royalty processing functions, and thus on its face could be read to regulate every aspect of the MLCs and DLCs businesses. 65 The MLC maintains that instead, the definition should be limited to information disclosed by DMPs, copyright owners, the MLC, or the DLC, and that relate to the MLCs statutory functions, so that it does not inadvertently sweep into its ambit 63 37

CFR 210.29c4v.
NPRM Comment at 2; FMC NPRM
Comment at 1.
65 MLC NPRM Comment at 2.
64 MLC

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