Recording a Cover Version
“Compulsory Mechanical Licenses”: The Facts and the Fictions
Q: “Please review this document. Do you know what a fax is?”
A: “Yeah, I do, man. It’s when you tell the truth, man, tell it like it is. That is what the facts is.”
—Excerpt from a trial transcript, from Uncle John’s Great Big Reader
When it comes to compulsory licenses, here’s “what the facts is.” Before you put out a record containing your cover versions of songs written by somebody else, you’re required by the federal copyright statute to first obtain a “mechanical license,” which typically comes in the form of a two or three page document. This “mechanical license” document will allow you to record and sell your cover version, and in exchange, will require you to pay a “mechanical royalty,” usually at the so-called “statutory rate,” which 9.1 cents per song per record as of the 2018. And so, if you are paying the full statutory rate and are using ten songs on your album, you would be paying 91 cents in mechanical royalties for each album sold (10 x 9.1 cents).
There are generally three possible ways to obtain a mechanical license, namely: (1) through a formal “notice of use” procedure set forth in the Copyright Office’s Regulations; (2) directly from the music publisher (i.e., the copyright owner) of the song; (2) from the Harry Fox Agency in New York (but, again, only if the Harry Fox Agency handles the particular song(s) that you need a mechanical license for).
Be careful, though: Even if you obtain a mechanical license, there are certain legal restrictions on what you can do with your cover recording, also as discussed below.
Some questions that commonly arise in connection with compulsory mechanical licenses are as follows:
What is “compulsory” about compulsory licenses?
IF you meet the legal requirements for being entitled to record a cover version, the music publisher (i.e., owner) of a musical composition has no choice but to allow you to record your cover version if you go through the Notice of Use procedure in the Copyright Office.
But because the Copyright Office procedure creates complications not only for you but also for the publisher, music publishers routinely choose to issue mechanical licenses voluntarily. because they know that if they don’t do agree to do so, you can use the Copyright Office procedure. So it’s just easier for the publisher to issue you a mechanical license voluntarily.
When are you entitled to be issued a “compulsory mechanical license”?
You’re entitled to a compulsory mechanical license to sell records containing your cover version, but only if all of the following requirements are met: (1) the song you’re covering was previously released as an audio-only recording; (2) your own record will be an audio-only record and won’t contain anything other than music; and (3) the primary purpose of your record is to sell it to the general public for their private use. (If the recording is created only for another use —for example, if you’re making the recording solely for broadcast usage or a Muzak-type system—you’re NOT entitled to a compulsory license. In that situation, it is completely up to the music publisher to decide whether to allow you to cover the song and the publisher can demand whatever terms they want.)
What if a song has never previously been on a commercially released record, or if for some other legal reason you don’t qualify for a compulsory license?
In that situation, the copyright owner of the song has no obligation whatsoever to issue a mechanical license to you, and the copyright owner is free to deny a license to you, even if they’re doing so for no good reason.
What’s the logic and policy justification for the compulsory license procedure?
Congress has attempted to balance the intellectual property rights of composers and publishers of original music with the rights of other members of the artistic community who want to record cover versions. Essentially, it’s been the policy of Congress to, on the one hand, give composers and music publishers the right to put certain conditions on other people’s use of their songs (for example, allowing publishers to be able to unilaterally, and sometimes arbitrarily, refuse to allow lyrics to be changed in cover recordings), while on the other hand encouraging artistic expression by allowing any artist to record a cover version subject to certain legal limitations.
How do you get a compulsory license?
As mentioned above, there are three possible ways to obtain a mechanical license allowing you to record and release a cover song: (1) through a formal “notice of use” procedure set forth in the Copyright Office’s Regulations; (2) directly from the music publisher (i.e., the copyright owner) of the song; (2) from the Harry Fox Agency in New York (but, again, only if the Harry Fox Agency handles the particular song(s) that you need a mechanical license for.
Most people use either #2 or #3 of these alternatives, because there are a number of disadvantages with the Copyright Office’s procedure. For example, you have to pay mechanical royalties every month rather than the usual every three months. You would also have to submit to the music publisher of the song an annual audit certified by a CPA, which isn’t ordinarily required with the first two procedures.
When does it make sense to seek a compulsory license from the Harry Fox Agency?
First of all, the Harry Fox Agency can only issue licenses for the songs of those publishers who have authorized the Harry Fox Agency to do so. Most large music publishers use the Harry Fox Agency, But many small and medium-size are not represented by Harry Fox. And if the Harry Fox Agency doesn’t represent a publisher, it cannot issue mechanical licenses on their behalf.
You can determine whether the Harry Fox Agency handles a particular song by going to their website https://secure.harryfox.com/songfile/public/publicsearch.jsp. If they handle the song, you can use their online licensing process, as long as you’re manufacturing 2,500 units or less.
Here’s one big thing to be aware of: If you need rights that are somewhat out of the ordinary—for example, if you want to make changes in the lyrics or music or use several songs in a medley, the Harry Fox Agency will not issue licenses allowing you to do so. In those instances, it’s better to seek a license directly from the music publisher (whether or not the music publisher is already represented by the Harry Fox Agency). And any music publisher can issue a license directly to you, even if the Harry Fox Agency already represents them.
As mentioned previously, you can sometimes negotiate a lower rate directly with the music publisher than with the Harry Fox Agency. The Harry Fox Agency will not, as a general rule, negotiate the compulsory license rate lower than the so-called “statutory rate” set forth in the Copyright Office’s Regulations.
In any event, it’s wise to obtain the necessary mechanical licenses before you record the cover song. And, bottom line, you absolutely need to obtain those mechanical licenses BEFORE you commercially release your record. AND THIS IS IMPORTANT: Don’t wait until the last minute before your record release: It can often take some time to get the necessary documents signed, especially if you need to deal directly with the music publisher. And, also, the mechanical license documents sometimes require that the credits read in a certain specified way, and you’ll need to know what that text is so that you can have it listed in your artwork for the record.
How do you find the music publisher for any particular song?
The most reliable way of finding the music publisher is through the online search engines provided by ASCAP, BMI, and SESAC?
You can also check the Copyright Office’s searchable database, https://cocatalog.loc.gov/cgi-bin/Pwebrecon.cgi?DB=local&PAGE=First. But this will provide information only about post-1978 songs.
Normally you can of course see songwriter/publisher credits on the album artwork of an album recorded by someone else, containing the song. But it’s not safe to rely on that information because often publishers sell their catalogs (or parts of their catalogs) to other publishers, in which case there will be a new publisher of the songs from those catalogs.
Also, sometimes there is a discrepancy between the information you get from certain sources, And so, whenever I need to determine who is the publisher for a certain song, I will cross-check the information from various sources, and if there is a discrepancy, dig further into the issue.
What if the song you want to cover is co-owned by two or more music publishers?
If that’s the situation, under copyright law any one of those publishers can issue a mechanical license for the song, on behalf of all of the music publishers who own the song. However, if they receive mechanical royalties, they have to account to their co-owners of the song and share the mechanical royalties in portions proportionate to each publisher’s percentage ownership of the song.
That being said, co-publishers often have an agreement between themselves, providing that each co-publisher will issue a separate mechanical license for its fractional share of any song covered by the agreement.
This leads into another issue; the importance of having the mechanical license agreement contain a warranty clause, whereby the publisher represents and warrants that they are legally entitled to issue a license to you and that no one else’s consent is required, and also stating that the publisher will reimburse you for all expense if it turns out that these representations were false (either intentionally or unintentionally) and you are sued by some third party for your use of the song.
Does a mechanical license entitle you to use part or all of someone else’s sound recording on your own record?
No, a mechanical license only allows you to make a new cover version of the song. It doesn’t allow you any rights to use any part of anyone else’s recording (for example, to sample someone else’s recording).
What rights do you have to make changes in the song you’re covering?
The copyright law provides that you may create and use a musical arrangement of a song only “to the extent necessary to conform it to the style or manner of interpretation of the performance involved, but the arrangement shall not change the basic melody or fundamental character” of the song.
This language is admittedly vague, though there are some things that this provision of the copyright law clearly allows you to do, and other things that are clearly NOT allowed.
For example, you’re clearly entitled to change the speed of a song, use whatever instrumentation that you want to use, or change vocal phrasings. But you are NOT entitled to change any lyrics or melody lines, or rearrange the song, or to “sample” someone else’s song. (In order to have the right to sample, you need a sampling license, which is different from a mechanical license.)
What if your version of a song is a parody of another song?
If your cover version in fact meets the legal requirements for being considered a “parody,” it won’t be necessary for you obtain a mechanical license at all or pay mechanical royalties, since parodies are considered “fair use,” thereby exempting you under the terms of the federal copyright law from any requirement to obtain a mechanical license.
But there are various rather technical guidelines about when a song will legally be considered a “parody.” The main thing is to NOT assume that just because a song has humorous features, that therefore it’s legally a “parody.” There are many humorous cover versions that do NOT meet the requirements to be considered a parody. If you ever get into this situation, you should take whatever steps are necessary to determine, as a legal matter, whether your particular song is entitled to be considered a parody. The big court case precedent for parodies is The Two Live Crew case. For more information on that case: https://en.wikipedia.org/wiki/Campbell_v._Acuff-Rose_Music,_Inc.
If you can obtain a compulsory license, what kind of projects can you use it for?
Only audio-only releases, and NOT for audio-visual projects (e.g., DVDs and karaoke machines with a video screen. (Factoid: the word “karaoke,” literally translated from Japanese, means “empty orchestra.”)
If I obtain a mechanical license in order to record and sell my own cover version, what countries can I then sell records in?
The mechanical license procedures described above apply to the U.S. and Canada. (The mechanical license documents and procedures for the United States and Canada are very similar.)
For all other countries, there’s a different system (discussed below).
But, first, a few words about Canada.
If you plan on selling records in Canada, you might first try to get a mechanical license from the U.S. publisher, allowing sales in both the U.S. and Canada. But if you aren’t able to obtain one from a U.S. publisher covering not only the U.S. and Canada, then you’ll need to contact either the Canada-based publisher of the song, or contact the Canadian Musical Reproduction Rights Agency (or “CMRRA”), the Canadian equivalent of the Harry Fox Agency. The web address for the CMRRA is http://cmrra.ca.
One other word about Canada: In some instances, the U.S. distributor will handle the mechanical royalty payments due for Canadian sales. If you have a distributor distributing your records to Canada, you should check to see what their mechanical royalty practices are with respect to Canada, (unless that information is already spelled out in your distribution agreement).
And now, for the rest of the world (“ROW”).
Very rarely will a mechanical license originating in the U.S. or Canada cover sales in any other countries. This is because the mechanical licensing procedures for all other countries are completely different; music publishers in those countries do not issue mechanical licenses directly to labels or self-releasing artists.
Instead, there is a formal agreement negotiated between the main trade organization for record companies in that country and the trade organization for music publishers in that country (called a “mechanical rights society.”) In short, the trade organization for the labels in any given territory pays mechanical royalties directly to the mechanical rights society in that territory. Then the mechanical rights society pays out to its music publisher members their share of the mechanical royalties received, based on how many records they sold.
In most countries, there’s only one mechanical rights society, and it’s quite often an official government-related organization. Also, in many countries, there’s one organization that collects both mechanical royalties AND performance income (for example, income due to publishers based on the airplay of their songs), unlike the situation in the U.S.
There are many ways in which the copyright laws of the United States are significantly different that the copyright laws of most other countries, and this mechanical license situation is just one example of that.
Incidentally, if you are manufacturing records in the U.S., then exporting those records to foreign countries, you are technically required to pay a mechanical royalty in the U.S. (because you
manufactured the record in the U.S.) Note: Your foreign distributor may be required under the rules of the country or countries in its territory to pay an additional mechanical royalty to the mechanical rights organizations in those respective countries.
For U.S.-based songwriters/publishers who are selling a significant number of records in foreign countries, it’s often a good idea to have sub-publishing agreements with music publishers in those countries. The reason being, if you’re not affiliated with music publishers in those countries, there are very high odds that the money to which you are entitled will go into “black box” accounts held by the music publisher associations in those countries, in which case your money will be retained by those organizations and their members, and never paid to you.
Does the catalog number that you designate for your record have any relevance to mechanical licenses?
Most mechanical licenses are issued for a particular recording, as designated by the record company’s catalog number for that record. Therefore, even if you’ve obtained a mechanical license to cover a song that you use on one record, you usually have to get another mechanical license for any later records that you might want to put that same cover version on.