By James L. Walker, Jr. (@jameslwalkeresq)
A couple of decades ago, I walked in a law office in NYC and met legal legend Bill Krasilovksy. Bill asked me if I knew the importance of the mechanical license.
As a young bright-eyed, law student I had never heard the term used before, but it was a concept that would change my legal career in the years to come.
A mechanical license is that agreement which is used for utilizing a song or rather copyright on a CD or record. Within the music industry, a mechanical license agreement gives you permission to create copies of a recorded song, like Prince’s, which you did not write and/or do not own the copyright under the law.
As the author, Prince, or his publishing entity and representative, uses a Mechanical License Agreement to give you permission to reproduce the song in various forms like a recording, on printed sheet music, the lyrics, for digital download or for a CD to sell in Walmart.
Copyright law also allows for a “compulsory mechanical license“. Under the law, anybody can obtain compulsory mechanical license without express permission from the copyright holder. This is where you are doing a straight “cover” of a song without changing anything – the owner is compelled, i.e., “compulsory”, to give you permission to use it under the law.
Under the Copyright Act, a songwriter should receive a certain rate for songs up to 5 minutes long that equates to about 9 cents for every CD sold. If a song is over 5 minutes long, you get paid 1.75 cents per minute or fraction thereof.
So for example, you sing and record “Purple Rain” for your upcoming CD. If the version you record is 5 minutes or less and you sell 1 million records; Prince would be owed about $91,000 (.091 cents under the Copyright Act for each record sold).
I have drafted thousands of mechanical licenses. Without a signed one, record labels may hold the royalties due to the lack of a signed agreement.
Also, of note, most record labels do not wish to pay the full 9-cents per song on a CD. They would typically ask the songwriter to reduce the rate to about 6 cents per CD, which on a platinum album, would save them $30,000 per song. (We will discuss this in depth in an upcoming issue).
It is imperative the songwriter understand what a mechanical license is in allowing others to use his song. Prince is one of the smartest artists on the planet, so he understands this very well and has a catalog, probably worth a billion dollars.
So, my old legal protege Bill Krasilovsky was correct: understanding the use and role of the mechanical license is very important if you are working in the music industry.
James L. Walker, Jr. is the Author of “This Business of Urban Music”. Email your thoughts on this article to firstname.lastname@example.org