The Ins and Outs of Mechanical Licensing

By Maurice Russell; Vice President of Licensing, HFA

If you plan to record a cover version of a song, or hope someday that someone covers songs you wrote, you need to know about mechanical licensing. A mechanical license is required under U.S. Copyright Law if you want to manufacture and distribute recordings of compositions written by someone other than yourself. It ensures that the music publisher, and ultimately the songwriter, gets compensated for the use of his/her work on a recording. Hopefully, this piece will help dispel some of the myths about mechanical licensing and clarify the process to obtain a license for your recording.

Mechanical licenses are needed for both physical recordings (CDs and LPs) and certain digital configurations, such as downloads (see sidebar on mechanical licensing terms). The royalty rate (what gets paid to the music publisher) for a mechanical license is set by law, and is known as the “statutory rate.” The current statutory rate is 9.1¢ for songs five minutes or less, or 1.75¢ per minute (rounded up) for songs more than five minutes long (see sidebar for examples of royalty rate calculations). You need to obtain separate mechanical licenses for each format. So if you have a cover song on your CD and offer a digital download on your website, you will need a license for each use.

And yes, you do need a mechanical license even if you are making only a few copies, giving the recordings away or selling them for charity. People often think these examples are included in the concept of “fair use.” They are not. Fair Use is much more limited under copyright law than is often assumed. It is not a list of things which are excluded — it’s a description of activities which might be defensible if the case went to trial. It is generally considered to apply to purposes such as the use of excerpts for criticism, news reporting, teaching and research. The flip side of this is that if you obtain the appropriate mechanical license and pay the full royalty rate, you cannot be prevented from recording the song (so long as it is not the first time the song has ever been recorded and distributed).

You may have also heard of something called “public domain.” A work enters the public domain when its copyright expires. The law currently maintains copyright protection on a work for the creator’s lifetime plus 70 years. Never just presume a song is “old” enough to be in public domain — always check. A good resource to for this is the website www.pdinfo.org. But be careful: while the song itself may be in public domain, the particular arrangement you chose may currently be under copyright and the song will need to be licensed.

There are several methods to obtain a mechanical license. One is directly from the music publisher. Another is through a licensing agent such as The Harry Fox Agency (HFA). Finally, you can obtain a compulsory license as described in the U.S. Copyright Act; however, most people do not go this route as it is very labor intensive and requires quite a bit of ongoing administration and reporting after the license is issued.

Whichever method you chose, you will probably need to provide at a minimum the name of the song, the songwriter(s), the publisher(s) and the length of your group’s performance of the song in minutes and seconds. You will also need to supply the name of your recording and its projected release date (the date you intend to begin to distribute copies of the recording). You may also be asked for the record company name, which is the entity that is officially responsible for the recording.

It’s key to start the mechanical license process early, preferably before you record. This way, if you have any delays in obtaining your licenses in time to manufacture and distribute your recording, it does not disrupt your plans. If you bring your master to a reputable CD duplicator and you don’t have mechanical licenses for songs you did not write, they will refuse to reproduce the CD for you. HFA has a simple online system called Songfile(r) that allows you to complete your transaction in minutes with a credit card or electronically from your checking account. If HFA does not represent one of the songs, or you otherwise decide to go directly to the publisher, the process is generally paper-based and can take longer.

As a songwriter, you are probably interested in how to get these mechanical royalties paid to you. If you have signed with a music publisher, how your mechanical licensing and royalties will be handled will probably be delineated in your contract. If you have not assigned your publishing rights yet, you are your own publisher, and you’ll need to handle any mechanical license requests that come your way.

One way to do this is to affiliate with a mechanical licensing agent such as HFA. A publisher can affiliate with HFA if they have songs that have been released on a recording that has been issued by a third party (not a self-produced recording). You then register your song catalog with them, and you can direct any inquiries to the agent.

So while mechanical licensing can seem very obscure, you can see how it is a fundamental part of recording and the music publishing industry. Very simply, if you like a song enough to cover it, you should make sure the songwriter is paid. It is the law, but it is also the right thing to do.

www.harryfox.com

www.copyright.gov

www.pdinfo.org

Maurice A. Russell is the Vice President of Licensing and Business Affairs for the Harry Fox Agency, Inc. (HFA). In this role, Russell oversees the Licensing Department, which works with licensees such as record labels and digital music services to provide fast and accurate licensing of the almost 1.9 million songs of HFA’s affiliate publishers. As part of the Business Affairs team, he works closely with Business Development to implement new licensing opportunities, such as those for ringtones, lyrics and tablature.

Definitions of Common Mechanical Licensing Terms

Phonorecord is a legal term for the physical medium on which a sound recording is fixed. Examples of phonorecords include, but are not limited to, compact discs, vinyl records and cassette tapes.

Digital Phonorecord Delivery (DPD) is a legal term for the digital transmission of a phonorecord which results in the transmission recipient retaining a full and permanent copy of the sound recording embodied in the phonorecord. DPDs require a mechanical license and are licensed at the same rate as a physical recording.

Limited/Conditional Download is a digital file that is delivered electronically to a computer (or other electronic device) to reside there for a limited period of time. For example, if you use an online subscription service, you have the ability to access your music as long as you pay the subscription fee. Limited downloads require a mechanical license, and the statutory rate is currently being determined.

On Demand Streaming is when a digital file is delivered electronically to a computer, read in real time by the computer and stored temporarily on the computer for the purpose of a one-time use. On demand streaming is the term given to streams that have been prepared and are available for users who wish to play a specific song at a specific time. On demand streaming requires a mechanical license, and the statutory rate is currently being determined (regular streaming requires a performance license).

So how do Icalculate mechanical royalties?

The current statutory rate for mechanical licensing is 9.1¢ for songs five minutes or less, and 1.75¢ per minute or fraction thereof for songs over five minutes, rounded up.

So, if your song is over five minutes long, the royalty for each copy would be:

5:01 to 6:00 = $.105 (6 x $.0175 = $.105)

6:01 to 7:00 = $.1225 (7 x $.0175 = $.1225)

7:01 to 8:00 = $.14 (8 x $.0175 = $.14)

If you are making 50 copies of a song that is 5:30 in length, the royalties would be:

$.105 royalty rate x 50 copies = $5.25