A mechanical license allows somebody to record and distribute music that was written by someone else. So – say I wanted to record a speed metal version of ‘The Girl from Ipanema’ – I would owe Antonio Carlos Jobim (or, at least his estate) royalties depending on the terms of a mechanical license. There are two ways a mechanical license could be achieved:
Compulsory – After an artist publishes a song, a compulsory mechanical license kicks in. Compulsory means that, whether the songwriter likes it or not, anybody has the right to rerecord their song (within some reasonable boundaries, like not radically changing the lyrics). As of January 1, 2006, the statutory mechanical rate is $.091 for songs 5 minutes or less, or $.0175 per minute or fraction thereof per copy for songs over 5 minutes. So say my speed metal masterpiece becomes a smash hit and sells 200,000 copies. I owe the songwriter gets $.091 X 200,000 = $18,200 (Ouch). As egalitarian as such a system is, it is rarely used – there’s an exceptionally strict payment system, and the federally mandated rates of pay are typically higher than can be had after negotiation. Most artists prefer to go…
Negotiated – Representatives of the copyright holder negotiate rates and payment schedules directly. The mechanics of payment for the publisher are handled by the Harry Fox Agency – which is basically the ASCAP/BMI/SESAC of mechanical licenses.
A few items to note here – the artist who wrote the piece always retains a right called ‘first issue’. This means that the artist, and the artist alone, decides who will record their song first. This right can be extremely important. Bob Dylan had initially intended to release his song ‘Mr. Tambourine Man’ as a cut recorded live at a folk festival. But when Dylan heard the final recording though, he decided it wasn’t quite up to snuff. Unfortunately, hIs record contract with Columbia didn’t give him the right to decide what material the company decided to release. Our man was in quite a spot.
So he denied his own record label a mechanical license to the song. Problem solved.
[More - CD Baby has a step-by-step process for obtaining compulsory mechanical licenses here]
