This is the fourth of a 4-part series on issues in music copyright. Part 4 will provide an overview of the different licensing opportunities available for musical compositions and sound recordings.
Authors of musical works may use their works for their own benefit or they may instead, or additionally, allow third parties to use their works via a license. In many instances a copyright owner will negotiate a direct license with a licensee, with both parties mutually agreeing upon term and conditions, including the payment of a fee for the use of the work. This is known as a voluntary license. In other instances, Congress has determined certain conditions under which a work can be used and has set a fee by law (“statutory rate”). This is known as a compulsory license. The available licensing scheme will depend on which copyright the licensee is seeking to use (musical composition or sound recording) and how the licensee intends to use that work.
Voluntary Licenses: There are a number of different situations in which a license must be negotiated between parties. These situations include:
- Reproduction and distribution: To reproduce and distribute a sound recording, a master recording license must be obtained from the copyright holder. To use the underlying musical composition, a compulsory mechanical license must be secured, as discussed below.
- Reproduction in audiovisual works: If you want to use a sound recording in a visual work, such as a commercial or movie, a master recording license must be obtained from the copyright holder. To use the underlying musical composition, a separate synchronization license must be obtained from the copyright holder.
- Public performance: If you would like publicly perform a work, you must secure a license for the musical composition, and if applicable, the sound recording. For larger music users, such as radio stations or restaurants, it is typical to secure a blanket license from a performance rights organizations (the major organizations being ASCAP, BMI, and SESAC). Performance rights organizations (PROs) enter into agreements with publishers to license out all of the publisher’s songs. Individuals or organizations who negotiate a blanket license with the PRO are permitted to publicly perform any song within the PRO’s collection. The fee for this use will be negotiated between the parties and will vary according to the scope of the use and the nature of the entity using the works.
As we discussed in part 1 of this series, you only need to secure permission to use a sound recording if the recording is being transmitted to the public through digital means. For digital audio transmissions that are interactive, such as Youtube, a voluntary license must be negotiated with the sound recording copyright owner for a master recording license. For digital audio transmissions that are non-interactive, such as Sirius XM or digital cable or satellite television services, a compulsory license is in place, as we will discuss below.
- Print rights: To print sheet music of a musical composition, a license must first be negotiated between the parties. Print rights can cover both physical printing and digital printing, with digital print rights being nonexclusive.
Compulsory Licenses: There are a number of licenses that are compulsory, meaning that the copyright owner must issue a license to a person seeking to use the work. These licenses include:
- Cable television rebroadcast: Local broadcasting stations must allow cable companies to re-transmit their signals, for a set fee.
- Public broadcasting system: Copyright owners must license the use of their published nondramatic musical works and published pictorial, graphic, and sculptural works in connection with noncommercial broadcasting.
- Digital performance of records: Copyright owners of sound recordings must allow performance of their recording if used in a noninteractive digital audio transmission. The four categories of works generally covered by this compulsory license are: eligible nonsubscription services, preexisting subscription services, new subscription services, and preexisting satellite digital audio radio services. Like the PROs mentioned above for public performance rights of musical compositions, SoundExchange is the organization that handles licensing for digital audio transmissions that fall within one of the four categories listed above.
- Phonorecords and digital downloads of nondramatic musical compositions: Once a non-dramatic musical work has been recorded and released to the public through a phonorecord (e.g. CD, audio DVD, MP3, record), the owner of the musical composition copyright must license use of the composition to anyone who wants to use it in a phonorecord, so long as the licensee does not change the basic melody or fundamental character of the song. This is known as a compulsory mechanical license. Many publishers handle their mechanical licenses through the Harry Fox Agency. In the event that the original work did not meet the requirements for a compulsory mechanical license (e.g. the work was not released to the public, the work was a dramatic musical work, etc.), a voluntary license must be negotiated with the copyright owner.
The compulsory mechanical license is tied to the statutory rate, meaning there is a minimum fee set by law that the licensee must pay for use of the work. Currently, the statutory rate for songs up to 5 minutes in length is 9.1¢ per song per unit. For songs that are greater than 5 minutes in length, the statutory rate is 1.75¢ per minute of playing time, or a fraction thereof, per unit. If, for example you wanted to make a 3-minute recording of a copyright protected song, and distribute 500 copies of your cover, you would need to pay $45.50 for the original composition ($0.091 X 500). If you wanted to make a recording that is 7 minutes and 15 seconds long, with 500 copies distributed, your rate would equal $70 ($0.0175 X 8= $0.14. $0.14 X 500= $70).
The new media rights of ringtones and permanent digital download are also subject to a compulsory mechanical license. While permanent digital downloads follow the same statutory rates as physical products (9.1¢ or 1.75¢ per minute of playing time or a fraction thereof), ringtones follow a different rate. Non-derivative uses for ringtones are set at 24¢.
This blog has laid out some of the possible revenue streams for musical compositions and sound recordings by mentioning the different situations in which a license must be secured for use of the copyrighted work. This concludes our 4-part series on music copyright.
Maria Scheid is a graduate of The Ohio State University Moritz College of Law and former legal intern at the Copyright Resources Center at OSU Libraries