What are mechanical licenses and how do they relate to mechanical royalties?

A mechanical license allows you to create and publish a new sound recording of a composition that doesn’t belong to you. People usually refer to this as a “cover song.” When a sound recording is “used”, a mechanical royalty must be paid to the owner of the underlying composition.

Since I already wrote a separate article taking an in-depth look at mechanical royalties, how they are earned, and what I mean by “using” a sound recording, I’d like to focus on mechanical licenses in this post. Also, make sure to check out my overview of the music business to see where mechanical licenses fit in.

There are lots of different types of licenses.

A mechanical license is just one of many types of music-related licenses. For example, two other biggies are sync licenses (using a composition in a video) and master use licenses (using a particular sound recording in another song, project, or video).

Unlike sync and master use licenses, mechanical licenses usually do not require an upfront fee to be paid to the publisher (owner of the composition copyright), but instead require a mechanical royalty to be paid every time the sound recording is “used”.

You don’t need a mechanical license for Public Domain songs.

Public, DomainIf you are doing a cover of a song that is in the Public Domain, you don’t need a mechanical license or pay mechanical royalties. Compositions (not sound recordings!) published in 1922 or before are in the Public Domain in the US.

You can use a site like PD Info to search for songs in the Public Domain.

Can anyone get a mechanical license?

Short answer, yes!

To get the license, simply contact the publisher and work out an agreement for how much and when you will give them royalties. What?! That sure sounds like a ton of work and maintenance! What if you can’t find or get in touch with the publisher?

That’s where “compulsory mechanical licenses” come to the rescue.

What is a “Compulsory Mechanical License?”

Copyright law created this idea of a compulsory mechanical license and a process for obtaining one. It’s basically just a mechanical license that is obtained in a special way, rather than working out the license directly with the publisher.

You can’t stop someone else from getting a compulsory mechanical license to cover a song you wrote!

Anyone can get a compulsory mechanical license, even if the publisher doesn’t want you to have a mechanical license! It cuts both ways: you can’t stop someone else from getting a compulsory mechanical license to cover a song you wrote!

How do I get a compulsory mechanical license?

You can get a compulsory mechanical license in a couple ways. It’s up to you which path to take.

  • Do it yourself.
    • Send a Notice of Intention (“NOI”) to obtain a compulsory license to the publisher, per Section 115 of the Copyright Act. It doesn’t matter if the publisher doesn’t get back to you about the notice. As long as you send it, you’re good. If you can’t find the publisher’s contact info, the law allows for a way to declare that you gave it your best effort: you basically send a notice to the copyright office instead.
    • Pay the publisher their corresponding mechanical royalties each month.
    • Pros: You have total control and you don’t have to pay any extra fees.
    • Cons: Lots of effort and maintenance. You have to figure out who to contact and pay them regularly.
  • OR, prepay and have a company manage everything on your behalf.
    • Companies like Harry Fox Agency, Loudr, and Easy Song Licensing offer services that allow you to easily obtain mechanical licenses.
      • You give them some basic info and pay an upfront amount of money for expected mechanical royalties for CD’s you manufacture and digital downloads sold in the US (see my article about mechanical royalties).
      • They figure out who to contact, send the NOI’s, and basically do all the steps you need to do, including sending them the mechanical royalties you just paid.
    • Pros: Pretty easy to obtain a license. A bonafide company that does this for a living is taking care of all of the details.
    • Cons: Mostly the cost. These services will charge you a “setup” fee per song, usually around $15. This fee is in addition to the mechanical royalties that need to be paid. You have to pay this fee every time you need to send more mechanical royalties to the Publisher because you manufactured more CDs than you paid for, or had more downloads of your song in the US than you paid for.
  • OR, let your distribution company manage everything on your behalf.
    • Many distributors such as CD Baby and DistroKid now offer similar cover song services that are integrated directly into distributing your song.
      • You give them some basic info and pay a one-time fee. You don’t prepay for any mechanical royalties.
      • They figure out who to contact, send the NOI’s, and basically do all the steps you need to do, including sending them the mechanical royalties from your sales AFTER they happen. In other words, the distribution company automatically deducts the mechanical royalties from any sales or streams that you get, and pays them to the publisher directly.
    • Pros: Easy and totally hands off. A bonafide company that does this for a living is taking care of all of the details.
    • Cons: These services will charge you a “setup” fee per song, usually around $15. These services don’t cover physical CDs; if you make physical CDs, you’d still have to use one of the other methods above to pay your mechanical royalties for your physical CDs.

What does a mechanical license cover?

A mechanical license allows you to publish a sound recording that you created from someone else’s composition. In other words, you didn’t write the song yourself, but you recorded your own version of the song. You’ll need a separate mechanical license for each new sound recording you make. An easy way to remember this is that if you need to assign a new ISRC to a sound recording, you probably also need a new mechanical license.

It’s important to note that mechanical licenses only cover the composition. They do not cover the original sound recording or someone else’s sound recording of the underlying composition. This is very important!

Music headphonesWhat this means to you is that although you can make your own version of someone’s song, you CANNOT use a sample of the song in your own sound recording without getting the proper licenses that cover that: in particular, you also need a master use license to use the “master” (aka sound recording) that someone else owns. Unfortunately, there is no corresponding “compulsory master use license” or standard royalty rates and fees available; in other words, you have to contact the publisher directly and work out all those terms. And in case you’re wondering, no, you can’t even use a single second of a sample or recording in your own sound recording legitimately without needing the license.

Also super important to note is that the mechanical license doesn’t allow you to change the lyrics or fundamental melody of the song. Sure, you can make your own arrangement of the song and give it your own feel and style. But as soon as you change the lyrics (aka different words, or even translate the lyrics to another language) or “substantially” change the melody, the mechanical license won’t cover that and you have to work with the publisher directly. The reason is because by doing that you are creating what is called a “derivative” work, and the owner of the composition has the exclusive right to determine what derivative works can be published.

If you do end up creating a derivative work, you’ll discuss with the publisher what the terms will be, including what percent of the writers and publishers share you’ll get. In this case, the derivative work becomes a “new” work and can be registered with a PRO. In fact, the new derivative work can also be copyrighted, such that the new composition copyright covers the changes between the original and the derivative.

For compositions in the Public Domain, you can create derivative works without needing permission or a license. In fact, assuming it is a real derivative work and not just a cover, you can copyright your new arrangement of the work. As an aside, in this case, you might get less from PRO’s like BMI and ASCAP for your publisher performance royalties. For example, BMI usually pays 20% for copyrighted arrangements of Public Domain works.

Lastly, for US-based musicians wanting a mechanical license, you should note that compulsory mechanical licenses only cover songs that have been released in the US. It’s pretty technical, but the idea as I understand it is that if any sound recording of the composition ever originated from a US-based manufacturer (e.g. a CD was manufactured in the US with that composition) or was ever downloaded or streamed from an online server in the US (such as a download from the US version of the iTunes store, or streamed from the US version of Spotify), then you can get a compulsory mechanical license for the composition. Otherwise, if the composition was never released in the US, you technically can’t get a compulsory license for it. In fact, if you happen to go to the theaters and really like a song in the movie, and you want to do your own version of it, you can only get a compulsory mechanical license if that song was released in the US. In other words, unless they also published the soundtrack to the movie on iTunes, Spotify, on a CD, or similar in the US, you can’t actually get a compulsory mechanical license for it.

Phew! Crazy stuff!

When do I need to get a mechanical license?

You don’t need a mechanical license until you want to publish your sound recording of another person’s composition. It’s very important that you obtain the mechanical license BEFORE you first publish the sound recording. Otherwise, the compulsory mechanical license is no good and you might get into trouble, fined, or even sued!

How much do mechanical licenses cost?

The royalty rates for mechanical licenses are set by the government. It’s basically $0.091 per CD or digital download, and around $0.0007-$0.0008 per on-demand stream. Check out the article I wrote about mechanical royalties for more details and to find out why you don’t really need to directly pay or prepay mechanical royalties for international digital downloads or for worldwide on-demand (interactive) streaming in most cases.

Congratulations for making it through!

KittenI’m pretty impressed that you managed to get through all of that. The music business is quite complex, and mechanical licenses and royalties are no exception.

As a bonus and thank you for making it this far, I’d like to show you an adorable picture of a kitten. Enjoy!

If you have any other helpful information that other musicians could benefit from, please share it in the comments below!

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