A copyright in a musical composition, is actually a “bundle” of five distinctive rights. If you are the copyright owner, then according to US Copyright Law you have the following five exclusive rights in your song.
- (a) to make copies of the song (through print, audio recording, visual recording, etc.)
- (b) to distribute the copies to the public
- (c) to publicly perform the song (live or through playing any type of recording)
- (d) to create a derivative work; and
- (e) to display the work (i.e a lyric display).
A mechanical license grants permission for someone to make and distribute copies of your song in recorded form (i.e. CDs, tapes, records, digital downloads and any other audio format). It is an agreement between the copyright holder and the end user. If anyone should record the song (or copy a recording of the song)
without a mechanical license, he is infringing upon the copyright, regardless of whether he is selling or giving it away.
The copyright owner in a musical composition has the first right to record and distribute the song publicly, or to license whomever he may choose to record and release it first. However, after the first recording has been made and distributed to the public, US Copyright Law allows anyone to record the song via the compulsory mechanical license provision of the law. In other words, you are compelled to grant requested licenses, after the first use has occurred. You can not refuse someone a license at that point. However, the law establishes a statutory mechanical royalty rate, which ensures that regardless of who records your song, you will be paid the standard rate (unless they negotiate a different rate with you). The current statutory mechanical royalty rate is $.091 per song, per copy, for physical products and permanent downloads. Just a little less than 10 cents. (For more specific details on ringtone, limited download, and other statutory mechanical rates, go here.)
You may note that every recording of a song embodies two distinct copyrights. One copyright in the underlying composition (noted by an encircled C) and another copyright in the specific master recording of that composition (noted by an encircled P). For instance, if you issue a mechanical license to a record company for the recording of your song by one of their artists, you maintain the copyright in the underlying composition, but the record company that creates the recording of your song will own the copyright in the actual master recording they make. Over time, you may license your song to many different artists who record your song in various styles and arrangements. In each case, the ownership in the song copyright stays with you, however every entity that records your song will own the copyright in their specific master recording. As an example, Lyric Street Records might obtain a mechanical license from you so their artist, Rascal Flatts can record your song on their new album. But then, if Time Life later wanted to take the Rascal Flatts recording of your song and place it on Time Life’s, Best of 2011 Country Tunes CD compilation, Time Life would need to obtain a mechanical license from you for the underlying composition, as well as a master license from Lyric Street Records.
Mechanical royalties can add up to a lot of money. At the current statutory mechanical royalty rate, if your song is on a CD which sells one million copies you would be entitled to NINETY ONE THOUSAND ($91,000) DOLLARS.
Because the statutory mechanical rate is increased periodically, it is best to seek payment for a mechanical license keyed to the statutory mechanical rate in effect at the time of manufacture. Record companies, on the other hand, may try to key the rate to that which is in effect at the time of initial release. Thus if a record is reissued many years after its initial release the composer/publisher would get the rate in effect at the time of reissue rather than the lower rate at the time of initial release.
As a matter of practice, many copyright owners hire an administrator or agency to handle licensing and royalty collection on their behalf. In the United States, most mechanical licenses are obtained through the Harry Fox Agency. Other commercial agencies such as RightsFlow and easySongLicensing.com also issue compulsory mechanical licenses. Harry Fox Agency and the other commercial agencies collect and distribute the royalties, plus they collect a service fee.
A mechanical license is not generally required for an artist who is recording and distributing their own work.