Moving on from broadcasting to the recording industry,

another type of the license for the

musical compositions is the

mechanical license.

Now, Mechanical License is a compulsory license,

required in order to record a

musical composition, and to

publically distribute the recording.

Statutory rate for this license is

currently 9.1 cents per song per copy distributed.

Being compulsory, this license can not be refused

if the statutory rate is paid,

with one exception:

the Copyright Act provides that the

owner of the musical work

(which means a musical composition, right?)

has the right to determine if the

composition will be initially

recorded and publically distributed as such,

and if so, to grant the license

to the entity of his or her choosing.

After the musical work has been initially

recorded and publically distributed,

this license can not be refused any more

if the statutory rate is paid.

Ordinarily, a record label requests

this license from a music publisher in

order to record a music composition owned

by the publisher.

To simplify and streamline the process

of mechanical licensing,

a nation-wide agency is set up as a clearing

house for mechanical licenses,

called Harry Fox Agency,

which has authorization to administer this license

on behalf of most of the U.S. based publishers

and authors at the statutory rate.

So just like the PROs are authorized

to administer the performance rights licenses,

Harry Fox Agency is authorized to administer

the mechanical licenses,

forwarding the payments to the publishers,

while keeping a percentage for the operating expenses.

It should be noted though,

that while most of the performance rights

licenses are obtainable only through the PROs,

the mechanical licenses can, and often are

obtained directly from the publishers

for less than the statutory rate of 9.1 cents per copy distributed.

Meaning, that record labels and producers

often negotiate this license with

publishers in order to receive more favorable licensing rate.

The license somewhat related to the mechanical license,

is the Musical Work Sampling License.

Musical Work Sampling License is a non-compulsory license

required in order to use any portion

of a musical composition as the

basis for a sound sample utilized

in a sound recording.

If a producer takes however

small portion of a copyrighted

musical composition,

records it and edits it so it

becomes a part of a recorded song,

as a loop, or as a one-shot segment,

that requires the Musical Work Sampling License.

Also, if a producer takes however small portion

of a pre-existing recording of a

copyrighted musical composition,

and edits it so it becomes a part of a recorded song,

also as a loop, or as a one-shot segment,

or any other way, that too requires the

Musical Work Sampling License, plus the

Master Use License, which we will discuss

later in the course when we talk

about the recording industry itself.

The Musical Work Sampling License

is payable by the record producers

and record labels directly to publishers.

The license is not mandatory, and the rate is freely negotiated.

The license seemingly related to the

public performance license we spoke about

earlier, but in fact very different in nature,

is the Transcription License,

or the Electrical Transcription License

as it’s sometimes called.

Transcription License is a non-compulsory license

required in order to use a musical work

as background music in businesses,

public buildings, spaces, and transport,

or in radio broadcasts.

Seems like that was covered by the

public performance license,

but it really refers to something else.

It refers to licensing the musical compositions

that producers want to use to record

the background music to be played in businesses,

public places and transport,

or as a part of a radio show or a radio commercial.

It refers to the compositions the producers want to “transcribe”,

to record for such use, thus the “Transcription License” name.

So this license is really a type of a mechanical license,

allowing the licensee to record a composition,

just not intended for duplication and sale

of the copies of the recording,

but for a limited type of public performance or radio broadcasting.

Since the intended use includes

a form of a public performance,

the public performance license

is sometimes contained in its scope,

and sometimes not.

If it’s not included,

the public performance license must be

obtained from the relevant PRO

before the public performance of the material.

The Transcription License is payable

by the background music companies,

in-flight entertainment productions,

radio program producers, etc.,

directly to the publishers.

The license is not mandatory, and the rate is freely negotiated.

The license actually related to the public performance license,

but administered differently,

is the Jukebox License.

Jukebox License is a negotiated type

of a public performance license and,

as such, is controlled by the Performing Rights Consent Decrees,

like all the other performance rights licenses.

It is administered and managed by the Jukebox License Office (JLO)

on behalf of the PROs and the Amusement and Music Operators Association (AMOA).

This license is payable by the jukebox operators to the JLO,

and then collected by the PROs

and distributed to their authors and publishers.

The license rates are not statutory

and are negotiated between the PROs and the AMOA

according to the guidelines set in the current Performing Rights Consent Decrees.

The next music license in line,

is the Synchronization License.

Synchronization License is a non-compulsory

license required in order to use a musical composition

in a motion picture, a video,

or in a television based work.

It is payable by the audiovisual works producers

directly to publishers.

This license is not mandatory,

and the rates are freely negotiated.

Upon receiving the license,

the producers can then record the composition

in question and place it in their movie,

video, or television production.

This license thus does not include an

existing recording of a song,

but only a composition to be recorded

by the licensee for the use in an

audiovisual production.

To use an already existing recording

of a song in the same context

requires an additional license,

which we will cover later in the course

when we talk about the recording industry.

Also, the synchronization license

does not include any form of the broadcasting

of the audiovisual production,

which is licensed separately through the public

performance rights license we spoke about earlier.

Nor does it include duplication in tapes or DVDs.

Such duplication is covered by the

video reproduction license.

Video Reproduction License is another

non-compulsory license required in order to reproduce

and distribute to the public the video tapes

or discs that contain copyrighted musical works.

This license is sometimes negotiated

as part of the Synchronization License.

Like the synchronization license,

it is payable by the audiovisual works producers

directly to publishers.

The license is not mandatory,

and the rates are freely negotiated.

The license that is often just a form of a synchronization license

is the Special Use License.

Special Use License is a non-compulsory license

required in order to use a musical work

in various merchandizing tie-ins,

and in a wide rage of products,

including video games and television commercials,

in which case this license becomes,

as we said, a type of a synchronization license,

allowing a licensee to record a musical composition

for the use in video games or television commercials.

This license is payable by the products’

producers directly to publishers.

The license is not mandatory,

and the rate is negotiable.

And finally, we will conclude our list

of the musical works licenses with the

so-called Derivative License.

Derivative License is a non-compulsory license

required in order to make a derivative version

of the original musical work,

often referred to as an “arrangement”.

This license is only required if the new arrangement

is substantially different from

the original work.

It is payable by the arrangers,

or the recording artists

or their record labels,

directly to the publishers.

The license is not mandatory, and the rate is negotiable.

Regulations 3: Musical Works Licensing (continued)

Today’s Music Industry

Meet the Instructors