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Federal Register / Vol. 86, No. 42 / Friday, March 5, 2021 / Rules and Regulations
the Office, whichever is later. The MLC
and DLC indicated that neither of them opposed the Office employing this approach.18
With respect to the DLCs concerns, the Office solicited comments on the DLCs proposal, which would exempt individual download licenses and voluntary pass-through licenses from the relevant reporting requirements under the September 2020 rule, and would instead impose alternative requirements that the DLC views as more appropriate and feasible for DMPs to comply with in light of the information they typically receive from record labels, but that still ensure that the MLC has sufficient information to fulfill its statutory duties. The Office specifically sought comments regarding its authority to adopt the DLCs proposal, and invited comments more generally on how to address, or whether the Office should address, the passthrough license issue, including whether a different approach should be taken.
The Office received responsive comments from the DLC, MLC, and the Alliance for Recorded Music ARM, all agreeing that the issue should be addressed, that the DLCs proposed solution should be adopted, and that the Office has the authority to do so.19
Having reviewed and considered all relevant comments in the record, the Office concludes that it is necessary and appropriate under its authority pursuant to 17 U.S.C. 115 and 702 to further adjust the current interim rule to address the concerns that have been raised.20 The Office further finds the DLCs unopposed proposal to be a reasonable approach that is within the Offices authority to adopt; thus, it is being implemented with only minor modifications, discussed below.
II. Supplemental Interim Rule The DLCs comments reiterate the concerns it previously raised:
The existing reporting regulations require permanent download services operating under the authority of voluntary passthrough licenses to report information that they do not knowin particular, the identity and contact information for copyright owners of the musical works embodied in sound recordings. That is because musical work copyright owners issue voluntary pass18 DLC

& MLC Ex Parte Letter at 4 Dec. 9, 2020.
DLC Supplemental Interim Rule Comment at 14; MLC Supplemental Interim Rule Comment at 24; ARM Supplemental Interim Rule Comment at 13.
20 See 17 U.S.C. 702, 115d4AiiIII, 115d12A; see also H.R. Rep. No. 115651, at 56, 14; S. Rep. No. 115339, at 5, 15; Conf. Rep.
at 4, 12; Natl Cable & Telecomms. Assn v. Brand X internet Servs., 545 U.S. 967, 980 2005.

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through licenses not to digital services, but to record labels, on the understanding that they will pass through the authority to make and distribute permanent downloads to downstream services. Record labels do pass on this authority but do not today report such identity and contact information to services through existing data feeds. Given that permanent downloads represent a diminishing even if still significant share of the market, labels and services will probably not invest in those reporting systems.21

ARM confirms that download stores . . . are still a significant contributor to the recorded music industrys revenues, contributing nearly $1 billion i.e., $856 million in annual revenues as of 2019.22 ARM
seconds the DLCs assertions that absent a change in the interim rule to address this problem, download stores would simply cease operations rather than investing the resources to build entirely new systems to collect and report the necessary information, adding that given the revenue figures cited above, any such decision by the operators of download stores would be extremely damaging to artists and labels alike. 23 The MLC also understands that the market for permanent downloads faces significant disruption if DMPs operating download stores under pass-through mechanical licenses are required to identify and provide contact information for each respective musical work copyright owner in order to have those pass-through licenses recognized by the MLC and carved out from the blanket license. 24 The Office agrees that the relevant reporting requirements adopted by the September 2020 rule should be adjusted in light of this additional information to avoid any such potential harm or disruption to the permanent download market, especially given that the MLC does not object that doing so may impede its ability to properly administer the blanket license.
The September 2020 rule required DMPs and SNBLs to report certain information about applicable voluntary licenses and individual download licenses, including the identity and contact information for the musical work copyright owners for works subject to such licenses.25 The DLCs proposed solution is to exempt pass21 DLC Supplemental Interim Rule Comment at 1;
see ARM Supplemental Interim Rule Comment at 2 n.1 Under this arrangement, it is the record labelsnot the download storesthat are responsible for providing reports of use to the musical work copyright owners..
22 ARM Supplemental Interim Rule Comment at 1.
23 Id. at 2 quoting DLC & MLC Ex Parte Letter at 4 Dec. 9, 2020.
24 MLC Supplemental Interim Rule Comment at 2.
25 37 CFR 210.24b8, 210.25b6, 210.27c5, 210.28c5.

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through licensesboth individual download licenses and voluntary passthrough licensesfrom these reporting requirements, and instead impose alternative reporting requirements pursuant to which DMPs and SNBLs must either indicate reliance on passthrough licenses for all of their permanent downloads or provide a list of all sound recordings covered by passthrough licenses, or provide a list of any applicable catalog exclusions where it is indicated that authority otherwise exists for all permanent downloads.26 The MLC does not oppose this proposal and states that with respect to the practical viability of the DLC Proposal, the MLC believes that it can effectively and efficiently administer the blanket license with the reporting adjustments in the proposal. 27
This proposal strikes the Office as reasonable in light of the concerns raised following the adoption of the September 2020 rule and the MLCs statements that the proposed alternative information to be reported will be sufficient for it to effectively and efficiently administer the blanket license. The remaining question is whether the Office has the authority under the MMA to adopt the proposal.
In the notice soliciting comments that accompanied the December 2020 rule, the Office said that in particular, the Office seeks comments regarding its authority to adopt the DLCs proposal in light of 17 U.S.C. 115d4AiiII, which requires DMPs to identify and provide contact information for all musical work copyright owners for works embodied in sound recordings as to which a voluntary license, rather than the blanket license, is in effect with respect to the uses being reported. 28
The Office said that while the DLC
argues that the statute is at least . . .
ambiguous and that the Office can exercise its general regulatory authority to clarify this issue, the Office is cautious about potentially concluding that the term voluntary license in that provision excludes voluntary pass-through licenses, and thus seeks further comments to aid its statutory analysis.29 The Office said that relatedly, it seeks comments as to whether there are any concerns, as a matter of statutory interpretation, with 26 DLC & MLC Ex Parte Letter at 4, add. B at 24, 7, 10, 2829 Dec. 9, 2020; see DLC
Supplemental Interim Rule Comment at 1; MLC
Supplemental Interim Rule Comment at 2 stating that this would continue the industry practice of identifying pass-through licenses by reference to the sound recordings.
27 MLC Supplemental Interim Rule Comment at 3.
28 85 FR at 84244.
29 Id.

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