Learn What a Compulsory License Is in Music

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A Compulsory license lets a musician record and sell their rendition of any previously recorded song by paying royalties to the copyright holder of the original composition. These laws let you legally release your new recording of any existing song, and under certain conditions, even without the copyright holder's permission. This is an exception to the rule under intellectual property law in which the owner maintains exclusive rights that he may or may not choose to license to others.

The law serves to foster creativity and allows indie artists the freedom to create new versions of popular music.

Prince, for instance, was known to be very protective of his songs and did not give artists permission to make new recordings of his music. If you approached him, he could demand a high fee or just turn down your request. But by following the Compulsory law, you can legally release your recording of Prince's music, or anyone else.

Compulsory License Steps

The Compulsory statutes require certain regulations in regards to reporting to the copyright's holder and paying royalties. First, a document called the Notice of Intention is sent to the copyright holder which states your intention to release your version of their song. It lists your album's information including the title, artist, release date and the number of CDs manufactured. This document is sent prior to distribution and includes a fee set by the Copyright Office, called the statutory fee or statutory rate.

The most recent fee, according to Nolo.com, is 9.1 cents per song, or 1.75 cents per minute of playing time. To check the current rate, go to the Copyright Office website and click “Mechanical Royalty Rate.” For example, if a song is three minutes long and an artist makes 5,000 CDs containing the song, the fee paid to the copyright holder is $455.

Alternatively, a musician can ask permission directly from the song owner and negotiate for a lower rate; you aren't legally required to abide by the Compulsory license standard.

Next, the copyright holder receives a Statement of Account laying out the royalties due. And lastly, the copyright holder can request an annual statement audited by an accountant.

Compulsory License Limitations

There are some restrictions to this the law that govern its usage. While you can change the general arrangement of the music recording, you cannot use a Compulsory license to:

  • Make fundamental changes to the lyrics or melody. In addition, you can't rearrange the sheet music under this license. For instance, if Band A records a rap song and Band B acquires a compulsory license, changes some of the words and turns the melody into a bluegrass ballad, Band A can revoke the Compulsory license and stop the recording from further distribution.
  • Request a song that hasn't yet been released. The copyright holder maintains the first right of release.
  • Request a song that's not copyrighted in the U.S. Music copyrighted anywhere else in the world is not covered by Compulsory law.
  • Use the song for live, public performance, a background track or karaoke. A Compulsory license only applies to music distributed to the public for listening use by the end user.