In this Part Two of a blog series on songwriting revenue, I discuss mechanical licenses.
Mechanical Licenses
A mechanical license gives a record company or other party the right to reproduce your song onto a record. You might negotiate this license directly with the person who wants to record your song. Alternatively, the person who wants to record your song may obtain a compulsory mechanical license.
The compulsory mechanical license is a creation of the United States Copyright Act. Here's how it works. Once a song has been commercially released, anyone may make another recording of that song and sell copies of his recorded version as long as he pays the song's copyright owner the license fees set by copyright law. In order for a compulsory mechanical license to be valid, the copyright owner must have authorized the commercial release of the song, and the song must be non-dramatic.
The Copyright Office periodically modifies the compulsory mechanical license rate. The current compulsory mechanical license rate, also called the statutory rate, is 9.1¢ per song per record for recordings of up to five minutes. If the recording is more than five minutes, the rate is 1.75¢ per minute per record.
Despite the existence of the compulsory mechanical license, most mechanical licenses are in fact negotiated. Many songwriters or their music publishers use the Harry Fox Agency to negotiate and issue their mechanical licenses, and to collect the corresponding license fees. The Harry Fox Agency charges a fee equal to four and a half percent of the mechanical license fees they collect.