Using Music and Masters Legally - Doing Music Right

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When you have been in the music business as long as I have, you start to formulate a list of the most asked questions. In this blog tip post I tackle some of those FAQ in the area of licensing and some basic agreement principals that I hope you will find helpful and insgithful. 


What is a Mechanical License and when is it required?
A: A mechanical license grants the rights to reproduce and distribute copyrighted musical compositions (songs) on CDs, records, tapes, ringtones, permanent digital downloads, interactive streams and other digital configurations. If you want to record and distribute a song that you don’t own or control, you will need to obtain a mechanical license. On the other hand, a mechanical license doesn’t include the use of a song or composition in a video, tv or film…..that type of usage requires a synchronization license which you will need to obtain by contacting the publisher(s) directly. The current statutory mechanical royalty rate for physical recordings (such as CDs) and permanent digital downloads is 9.1¢ for recordings of a song 5 minutes or less, and 1.75¢ per minute or fraction thereof for those over 5 minutes.


What is a Compulsory License and when is it required?
We live in a day where everyone wants to record a song or composition that they’ve heard on the radio. The term when you re-record a song that has already been released is typically known as “covering a song”. You basically are putting your own spin, or creating your own arrangement of that song. When this occurs you will need to issue or give notice of what is called a Compulsory License. 

Under section 115 of the Copyright Act, an individual or entity, subject to certain terms and conditions, may make and distribute phonorecords of nondramatic musical works that have been distributed as phonorecords to the public in the United States under the authority of the copyright owner. As discussed below, this compulsory license includes the right to authorize others to engage in the making and distribution of phonorecords and to distribute the phonorecord by means of a digital phonorecord delivery.

Here are few additional questions we commonly get asked about Compulsory Licenses:

I just recorded my version or “covered” a song, do I need to use a compulsory license? 
No. You are welcome to take your chances and deal directly with the publishers and writers of that composition with the hopes and possibly to negotiate a lower rate (which rarely is granted or is successful). However, if the copyright owner is unwilling or is unreachable then a Compulsory license must be issued or used.

When is a compulsory license used? 
As soon as a song/composition of a non-dramatic work has been been distributed to the public or “commercially released” in the United States or its territories. If the song you are wanting to “cover” has NOT been commercially released i.e. found on iTunes etc, on a record or CD etc., then the Mechanical License must be used, and you must seek direct permission from the copyright owner(s).

How do I obtain a compulsory license?
 In order to obtain a compulsory license, you must first (1) serve a timely Notice of Intention to Obtain a Compulsory License (which is simply a notice of the compulsory license), either to the copyright owner or to the Copyright Office if the identity or address of the copyright owner is unknown; and (2) when the copyright owner is known, make monthly royalty payments and provide monthly statements of account to the copyright owner.

How much do I pay for a the use of song under a compulsory license?    
Unless you have made a direct deal with the copyright owner the same mechanical license statutory rates apply which is:  9.1¢ for recordings of a song 5 minutes or less, and 1.75¢ per minute or fraction thereof for those over 5 minutes.

What can you NOT do with a compulsory license?
One of the biggest mistakes made when recording a song via a compulsory license is assuming you have the right to either change lyrics or change the melody, these are huge NO, NO’s. The compulsory license allows you only the ability to record the song “as is” with no lyric or melodic changes. If you want to make these type of changes you MUST obtain permission directly with the copyright owner(s).


When is a Grant of Rights/Release form required?
Although not often completed, the Grant of Rights/Release forms should be used for each individual that has performed on a recorded song on your project i.e. guest singer, musicians, background vocalists etc. This form can be filled out with or without a fee attached, however paying a fee, which is often referred to in agreements as “good and valuable consideration”, is common practice and considered good business.


When is a Master Use License Agreement required?
When the actual physical “master” or the actual recording in its finished state of song exists (this is the recording you actually listen to NOT the song itself either on a CD or in digital form i.e. mp3, wav etc), that you did not pay for or belongs to someone else or another company, you will need to obtain a Master Use License Agreement with the owner of the master in order to use or distribute that song on your project, or release to be distributed.