| A very important notion of U.S. Copyright Law is the existence of compulsory licenses. These "licenses" give certain types of users (e.g., recording artists, record companies, cable systems, jukebox operators, and public broadcasters) the right to use copyrighted musical works without the permission of the copyright owner, provided they follow certain procedures and make payment of royalties.
Copyright owners and users are still permitted to negotiate their own agreements if they so choose, and such agreements supersede the statutory rates.
For audio recordings, once the copyright owner (usually the music publisher) authorizes one recording that is distributed to the public in the United States, anyone else may make recordings of the composition regardless of whether they have permission from the copyright owner.
The Copyright Act requires that, prior to the distribution of records, a "notice of intention to obtain compulsory license" be given to the copyright owner containing, among other things, the work being recorded, the name of the new recording artist, the names of the original writers of the work, the name and address of the person or company taking the license, and the date when the phonorecords are set to be distributed.
The compulsory license applies only if the primary purpose in making the phonorecords is to distribute them to the public for private use and includes the right to make an arrangement of the work as long as it does not change the basic melody or fundamental character of the work. The act requires monthly as well as annual summary accountings to the copyright owner as well as the timely payment of statutory fees. The rates for 2009 to 2012 are 9.1¢ per composition or 1.75¢ per minute of duration, with future rates to be established.
In reality, most mechanical licenses that are issued in the United States are not compulsory licenses but variations of the compulsory license, with terms that are somewhat less stringent than those dictated by the Copyright Law.
For example, if a record company uses the mechanical licensing services of the Harry Fox Agency in New York, the licenses issued are modifications of the compulsory license provisions and contain terms that are acceptable to virtually all major and smaller record companies.
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