Key Takeaways

  • A compulsory mechanical license allows anyone to record and distribute a previously released musical work without direct permission from the copyright owner, provided they pay the statutory royalty and follow specific requirements.
  • Section 115 of the U.S. Copyright Act governs compulsory licensing for phonorecords, ensuring that once a song is published, its reproduction cannot be withheld.
  • This type of license is commonly used for cover songs and applies to physical formats (CDs, vinyl) and digital downloads, but streaming services usually operate under blanket licensing agreements.
  • Licensees must submit a Notice of Intention and pay royalties based on the number of copies produced.
  • Compulsory licenses cannot be used for derivative works, dramatic compositions, or songs that haven’t been previously distributed.

Compulsory licenses allow owners of copyright licenses or patents to be the only ones with the right to use their copyrighted material. Copyright law allows creators to have specific rights over their works, which includes the right to perform, distribute, or reproduce their work. If someone else wants to distribute or reproduce their work, they must get permission from the copyright owner first. If they don't obtain permission, the original owner can sue for infringement.

Copyright and Compulsory Licenses

There are some circumstances, also known as compulsory licenses, where it's not required to get a copyright owner's permission as long as the user pays certain fees and follows rules the law sets. Common examples of compulsory licenses are used by cable providers, music companies, satellite television providers, and webcasters. This license lets a singer or musician record and sell their version of a song that was previously recorded, as long as they pay royalties to the person who wrote the original composition and is the copyright holder.

An exception to the rule exists under intellectual property law where the owner keeps the exclusive rights to decide if they want to license to others or not. They can decide if they'll let indie artists create a new version of their popular song. When phonorecords have been distributed publicly in the United States and the copyright owner gives consent, anyone can get a compulsory license. This means they're allowed to make and distribute their own song without getting express permission from the original owner. Some don't allow others to make new recordings, such as the late singer Prince.

Understanding the Purpose of a Compulsory Mechanical License

A compulsory mechanical license is a legal mechanism that balances the rights of copyright owners with the public interest in promoting creativity and cultural exchange. Once a song has been commercially released to the public, the law ensures that others can legally record and distribute their own version without needing the original creator’s explicit approval — provided certain legal conditions are met.

This system is particularly valuable in the music industry, as it encourages new artistic interpretations of existing works while still ensuring that songwriters and publishers are compensated. For example, if an artist wants to release a cover of a well-known song, they do not need permission from the original publisher — but they must pay the compulsory mechanical royalty rate set by law.

While physical formats (like CDs or vinyl) and digital downloads require payment under this license, streaming services typically operate under blanket mechanical licenses, so individual compulsory licenses are not necessary for covers released only via streaming.

Compulsory License Steps

Certain regulations are required when reporting to the copyright's holder and when paying royalties.  A document titled the Notice of Intention is first sent to the copyright holder and lists the intention of the new artist to release their version of the song. It will also state the following about the album:

  • Title
  • Artist
  • Date of release
  • How many CDs were manufactured

This gets sent before distribution and includes a certain fee that the Copyright Office sets which is called the statutory rate or statutory fee. To see what the current rate is visit the Copyright Office website and look for "mechanical royalty rate." If a song's length is three minutes and there are 5,000 CDs made by the artist that has the song on it, the copyright holder would receive $455. No paperwork is sent by the copyright holders, and instead, a license gets granted automatically. No return paperwork is needed.

Legal Framework and Requirements

The legal foundation for compulsory mechanical licensing is found in Section 115 of the U.S. Copyright Act, which grants a statutory right to reproduce and distribute phonorecords of a nondramatic musical work. To qualify, the original work must have been previously distributed to the public in the United States with the copyright owner’s consent.

Key requirements include:

  • Notice of Intention (NOI): Before releasing a cover, the licensee must submit an NOI to the copyright owner or the U.S. Copyright Office if the owner is unknown.
  • Statutory Royalty Payment: Royalties are calculated based on the number of phonorecords manufactured and distributed. Rates are periodically updated by the Copyright Royalty Board.
  • Accurate Accounting and Reporting: The licensee must regularly report production numbers and payments.
  • Scope of Use: The license only permits making “phonorecords” — it does not authorize use in audiovisual works, film, or dramatic performances.

Failure to comply with these requirements can result in copyright infringement, even if the licensee intended to follow the law.

How Compulsory Licenses Work

A compulsory license is one of the most commonly used in the music industry. A recording artist is not required to use the compulsory license, as many artists get permission directly from the original song owner and try to negotiate a lower rate. The compulsory license only authorizes the song to be used for musical compositions that are non-dramatic. It is not allowed to be used for dramatic compositions, such as an overture to a musical or in the opera. Phonorecords can only be distributed in public, which means they can't be used for the soundtrack of a television show.

The licensee is allowed to create a new arrangement of the song as long as the fundamental character stays the same. The court has the right to tell a copyright owner to allow a license to be granted to an innocent infringer instead of having it stopped. In countries such as the United States that subscribe to the Universal Copyright Convention, an author might need to allow a compulsory license to another subscribing government in order to translate their work into the country's main language, such as if there hasn't been a published translation in the past seven years.

When to Obtain a Compulsory Mechanical License

It’s essential to understand when a compulsory mechanical license is needed. Generally, you must secure one if you plan to:

  • Release a cover song on physical media or as a digital download.
  • Distribute copies of a song as part of a commercial product, such as a compilation album.
  • Release a version of a song that remains faithful to the original composition (minor changes like key or arrangement are acceptable, but derivative works are not).

A compulsory license is not needed if:

  • The song has not yet been commercially released — in this case, permission from the copyright owner is still required.
  • The song will only be distributed via streaming services, which typically have blanket licenses in place.
  • You intend to significantly alter the lyrics or composition, which would create a derivative work requiring direct authorization.

This distinction is crucial for artists, producers, and distributors to avoid unintentional infringement and ensure proper royalty payments.

Compulsory License Limitations

A general rearrangement can be made of a recording, but the new singer can't obtain a compulsory license if the sheet music is rearranged in their composition. The copyright holder also has the right to be the first one to release their song. Therefore, a compulsory mechanical license can only be obtained if the song has been released previously.

Common Misconceptions and Practical Tips

Many creators misunderstand the scope of a compulsory mechanical license. It does not grant unlimited use of a copyrighted work. It covers only the right to reproduce and distribute an existing musical composition — not the right to use the song in synchronization with video, incorporate it into a dramatic work, or make substantial alterations to its structure or lyrics.

To stay compliant:

  • Verify eligibility: Ensure the song was previously released in the U.S.
  • Respect derivative work restrictions: Significant lyrical or compositional changes require direct permission.
  • Keep thorough records: Maintain documentation of NOIs, royalty payments, and distribution numbers.
  • Consult a legal expert: Navigating copyright law can be complex, and professional guidance helps prevent costly mistakes.

Frequently Asked Questions

  1. What is a compulsory mechanical license?
    It’s a legal right under U.S. copyright law that allows anyone to reproduce and distribute a previously released musical work, provided they pay statutory royalties.
  2. When do I need a compulsory mechanical license?
    You need one if you plan to release a cover song for sale or distribution on physical media or digital downloads, but not typically for streaming-only releases.
  3. Can I change the lyrics or melody under a compulsory license?
    No. Major changes create a derivative work, which requires direct permission from the copyright holder.
  4. Are compulsory licenses available for dramatic works or soundtracks?
    No. They apply only to nondramatic musical works and cannot be used for synchronization with films, shows, or theatrical productions.
  5. How are royalties calculated under a compulsory license?
    They’re based on the number of phonorecords made and distributed, using the statutory rate set by the Copyright Royalty Board.

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