The Big Picture of Mechanical Licensing Agreements:
You’re an independent artist and you love Madonna! You love her so much that you’ve decided to record (or “cover”) an album of her biggest hits. Your versions of her songs sound great and your manager suggests that you sell this Madonna cover album on iTunes. However, one slight problem! Before you can sell your album, you’re told by your entertainment lawyer that you must first get a “mechanical license” from the copyright owners, that is, the original writers of the song. So what the hell is a mechanical license you say?!!
What is a mechanical license?
Well, let’s start from the beginning. Typically, a license is a permission granted by an owner (“the Licensor”), for example, the individual songwriters of the Madonna songs, to a third party (“the Licensee”) like you. So, a mechanical license is a license that grants you, as the Licensee, the permission to reproduce copies of the lyrics or instrumental music of a recorded song, which in this case are the Madonna songs. A mechanical license does not grant permission to reproduce a sound recording (master) of the song which in your case does not apply because you hired a band to re-record the music.
What is a compulsory mechanical license?
By simply recording the original Madonna songs, the original songwriters have provided you with what’s known as a “compulsory” mechanical license. Under copyright law, the original songwriters are “compelled” to issue you a mechanical license to re-record the songs as long as you pay them what’s known as a “mechanical royalty”. In other words, you don’t have to get permission from the original songwriters to record a cover of the song and anyone can obtain a compulsory mechanical license. Obviously, if you write your own songs and want to distribute them, you don’t need a mechanical license.
So, how do you get a mechanical license?
To obtain a mechanical license, you’ll need to sign a mechanical licensing agreement with the songwriters (or publishers) and likely pay a mechanical royalty unless you receive a free (or “gratis”) mechanical license. The mechanical royalty rate paid is either negotiated with the copyright owner directly or set by the Copyright Royalty Board. The current statutory mechanical royalty rate is 9.1 cents per song per unit for recordings of compositions up to five (5:00) minutes in length. In other words, for each Madonna cover record on your album, you have to pay the original songwriters a mechanical royalty rate of 9.1 cents or 0.91 cents if the album contains 10 songs. For songs over five (5:00) minutes in length, the rate is based upon 1.75 cents per minute or fraction of a minute. For “controlled compositions,” i.e., songs that are written and recorded by a new recording artist signed to an exclusive recording agreement with a record label, the controlled composition clause in the recording agreement usually limits the amount of mechanical royalties the record label is required to pay to the songwriters to ¾ or seventy-five (75%) percent of the statutory mechanical royalty rate (i.e., 0.91 cents) or 6.825 cents. Complicated math to say the least, but those pennies add up and could put significant money in a recording artist’s pockets! Important terms of a mechanical license agreement that your entertainment lawyer will advise you of include: declaration of ownership of the copyrighted song by the Licensor; description of the rights granted to the Licensee, the royalty amount to be paid, and the Term of the mechanical license agreement.
Where/who do you get a mechanical license from?
Instead of having to go to each individual writer and their publishers to get a mechanical license, there are companies that will issue mechanical licenses on behalf of their member writers and publishers. One such company is the Harry Fox Agency (HFA). HFA is the “foremost mechanical licensing, collection and distribution agency for music publishers in the United States.” Established in 1927, HFA issues mechanical licenses, then collects and distributes music copyright royalties on behalf of copyright owners. It licenses the largest percentage of the mechanical and digital uses of music in the United States. The HFA licenses cover physical or digital reproduction, including reproduction of CDs, ringtones, and Internet downloads. Should you plan on pressing CDs as well as selling the album digitally on iTunes and other online retailers, HFA should be the first place you go to get that mechanical license. The HFA mechanical licenses are a written variation of the compulsory license. The form is fairly straightforward and requires the Licensee to submit information about the licensed song, anticipated number of uses and the music publisher. You can check out the HFA mechanical license form here. Other more recently formed commercial licensing agencies include RightsFlow and EasySongLicensing.com. If for some reason, these companies can’t issue mechanical licenses, you may also obtain a mechanical license directly from the copyright owner. So, hopefully your questions about mechanical license agreements have been answered and make sure to send me a copy of that Madonna cover album when is done ‘cause I’m a big Madonna fan!
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Hello Robert. That is a good article. As a digression and distraction from what I really want to do, it makes much sense. I just want to be as worthy as you in this comment. Without acting like I want to change everybody’s life ( I don’t want to do that,) I would like to add some material, as I am looking for a music recording contract, Maybe you have something to say about negotiating record deals. They are not discussed in the streets for a start. Offices are required. I repeat I genuinely do not want to sound like an autocrat here. I am trying to make good songs for people who really like listening to music. Most of the time the pleasure they get from that is entirely away from the way that they barter for news using the internet. I mean, there isn’t any relative enjoyment in nit-picking music and management. People should just accept that some people write more than others and I am actually trying to work here with this comment. You mention a few issues. Some are cryptic. I will do my best. Riding a bike is not easy when you begin, but it is much faster learning to do that than to find a record deal using internet commentary. The former uses up a week. The latter uses up twenty years, at least, I think about if I would need a copyright licence to record “Running to Stand Still,” by U2 and post it at YouTube. By my comprehensive, I would say that mechanical royalties are well and truly needed. I hope that really is a sky-sized bonus for you to know that. People need much more mutual respect in the music business if I may say so. People should not pick up on every little tiny mistake. Even after all, they would only be complaining, miser-like, about what they think is wrong. The other person is perfectly happy thank you very much and did not want the plaintiff to spoil his own good times. Last, managing is like managing minion-like behaviour from very unruly adults. I am not making this points into a polemic. The PC screen has written on it that commenting will help me find my way towards a record music business (I need one to pay me for recording music, to be a simpleton.) If you can help with that, please do. It is likely that this will be deleted very, very soon, like a recording in the Mission Impossible movie, so extra thank-yous for that. Worst of all, everything has been made so difficult in music. It is still bad to realise that managers are doing all of the work. I can think of plenty of superstars. Some of them are very helpful. But surely the most dismissive critics are the people that everyone who has ever worked in music will know as the know-alls from the most miserly part if the shared and mutually exclusive world. I mean this has plenty of long long gags in it and they will still claim the thing is a load of nonsense. Everyone believes that people should work in music without wondering about ethnicity. I agree with that. People make mistakes when they think that the lack of involvement is something that people are using to their advantage. That is the thing on a beach, like a surfer rosa playing toe-ball with itself. Oh and by the way it is obvious that there is no room for discussion like this on the British Isles. That’s the thing again.
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Robert, (if I may call you Robert,) this looks like a very complicated idea. The comments of other people have been read and I am concerned with the fact that they do not spell English very well. I am not trying to cover any Madonna songs. I see what you mean in that religious iconography plays a part in what goes on. It can be put to good use if you know good people. I am wary of anyone looking down the drain. The difficulty of finding a way to pay Madonna and her company a mechanical royalty payment because you are covering her songs is extreme. I would not investigate that. That is why I would prefer to write my own songs and avoid those complications. If someone asks you a request, that you must participate in playing Madonna’s songs, then you would have to go through those complications. In that case I would think that the person asking you to play those songs would have to process the complete mechanical royalty payment administration. That would probably mean that the person making the request works for a record company. That means that you would work for a record company. By the way, I have been trying to speak with people from a record company for a long time and people do not respond to my e-mails. Any comments on this subject would be welcomed. I graduated from university with a degree in a European language. I am from Surrey in England.
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I don’t know much about mechanical royalties or mechanical licences. My music and songs have been posted at YouTube, Vimeo, Soundcloud and Reverb Nation. Some of them have just been recorded using a laptop. I am not being paid royalties for that. They are at the websites to promote me and advertise my work. I am looking for a recording contract. I am trying to speak with Richard Russell who owns XL Recordings in London about contracts. I knew a Sarina (Xarina?) Russell in Bristol, a friend of Kevin Lucas. I went to an outdoor party with her and her friends. It was a treat for me. It was around 1994 or 1995. We discussed Jimi Hendrix and admired a poster of him. Now I’m looking for a post and I can’t speak with Richard Russell. I wonder if he knows Sarina. Sarina Russell and I did not continue our acquaintance. Maybe Richard can resurrect my activities with the Russells from London or from afar? It would be good for us all of course. I would like people to be more adventurous with getting to know me. If nobody speaks then it will be impossible for me to find a recording contract. It is so obvious.