In our previous posts in our Music Law 101 series, we have covered the basics of copyright law, including the scope of copyright protection, copyright ownership, the exclusive rights of copyright, the duration of copyright protection, transfers and termination of copyrights, and copyright infringement and fair use. In this post, we continue on the topic of copyright law and discuss common music licenses.
Like any other property, music copyrights and the individual exclusive rights thereof, can be transferred, sold, licensed, and divided among several owners. In general, to use recorded copyrighted music, you will need permission from both the musical work owner (typically a publisher) and the sound recording owner (typically a record company). Note, however, if you re-record a song (instead of using a pre-recorded version), permission generally is only required from the musical work owner (since you are not using someone else’s sound recording).
Following are descriptions of common music licenses:
Mechanical Licenses: This type of license authorizes the audio-only reproduction of a musical work, which is typically controlled by a music publisher. For example, a record company will enter into a mechanical license agreement with a music publisher or other musical work owner to authorize the reproduction and distribution of a recording of the musical work.
Section 115 Compulsory License: The Section 115 compulsory license is a statutory mechanical license that permits anyone to reproduce and distribute copies of nondramatic musical works, subject to certain conditions. Such copies may include physical copies, including CDs and records, or copies made in connection with digital transmissions (defined as “digital phonorecord deliveries” or “DPDs”), including digital downloads, limited or “tethered” downloads, interactive streaming, and ringtones. The conditions of the Section 115 license include the following:
- The copyright owner must have distributed the musical work to the public (that is, the copyright owner has the right to control the first use of a musical composition);
- The user’s primary purpose must be to create and distribute “phonorecords” or DPDs to the public for private use (there is no compulsory license to use music with video);
- The user may make a musical arrangement of the work to the extent necessary to conform it to the style or manner of interpretation of the performance involved, but the user may not change the basic melody or fundamental character of the work;
- The use cannot involve copying a sound recording (unless separate permission is obtained from the owner of the sound recording); and
- The user must pay a compulsory license royalty. The royalty rates are set by the Copyright Royalty Board, which is composed of three full-time judges appointed by the Librarian of Congress.
As we will discuss in our next post, the recently-enacted Music Modernization Act changes the process for obtaining and administration of the Section 115 compulsory license, particularly for digital music providers such as Spotify, Apple Music, and Tidal.
Master Use Licenses: This type of license authorizes the reproduction of a sound recording, which is typically controlled by a record company. For example, one would need a master use license to put together a compilation record of existing recordings, to use a “sample” of an existing recording in a new song, or to use an existing recording in a film. There is no statutory compulsory license for the reproduction of sound recordings, so master use license fees can vary widely.
Synchronization Licenses: This type of license, also known as a “synch” license, authorizes the reproduction of a musical work to be used in connection with visual images, such as a motion picture, television show, or television commercial. Synch license fees can vary widely. And, keep in mind that synch licenses generally only cover the musical work. If an existing sound recording is to be used in the new audiovisual work, a master use license is also required from the record company.
Performance Licenses: The performance of musical works, for example, by playing songs on the radio, on television, on a website, or in stores, restaurants, bars, and nightclubs, is generally permitted under performance licenses issued by the three performing rights organizations (“PROs”): ASCAP (www.ascap.com), BMI (www.bmi.com), and SESAC (www.sesac.com). A new PRO has also recently entered the scene—Global Music Rights (www.globalmusicrights.com). On behalf of affiliated writers and publishers, PROs generally issue blanket performance licenses to music users, and license fees are based on a variety of factors.
Section 114 Compulsory License: Performance licenses for the use of sound recordings are only necessary when the performance is via digital audio transmission, such as for Internet radio stations. The right to publicly perform a sound recording can be secured through a compulsory license under Section 114 of the Copyright Act, subject to certain conditions. The statutory license is administered by an organization called SoundExchange. Unlike PRO licenses, SoundExchange does not offer or negotiate a license agreement. Rather, a webcaster must file a “Notice of Use” with the U.S. Copyright Office along with a filing fee before it starts streaming. Upon filing, a website is automatically entitled to the Section 114 statutory streaming license, provided the webcaster complies with several statutory conditions, including the following:
- The webcast cannot be interactive (that is, songs cannot be played “on demand” and songs cannot be played within one hour of a request or at a time designated by the listener).
- The webcast must include the information encoded in the sound recording by the copyright owner, such as the title, featured artist, and other related information.
- The webcaster cannot, during any three-hour period, play more than three sound recordings from one album (and no more than two songs played consecutively) or four sound recordings from the same artist or from any set or compilation.
- The webcaster cannot publish an advance program schedule or make a prior announcement of when specific songs will be played.
- The webcaster must make monthly payments to SoundExchange at the statutory rate determined by the Copyright Royalty Board (which varies depending on the type of service provided). SoundExchange, after deducting operating costs, disburses 50% of the collected royalties to the copyright owner (typically the record company), 45% to the featured recording artists, and 5% to the non-featured musicians and vocalists.
Print (Lyric) Licensing: This type of license, secured from the songwriter or music publisher, as applicable, permits the printing of sheet music or lyrics to a song, for example, for karaoke CDs, websites, T-shirts, and posters.
In our next Music Law 101 post, we will close out the topic of copyright law and discuss the new Music Modernization Act and explain the important changes it makes to copyright law.
The Music Law 101 series is provided by Coe W. Ramsey and Amanda M. Whorton of the law firm Brooks, Pierce, McLendon, Humphrey & Leonard LLP. Brooks Pierce provides sophisticated and strategic counsel to a wide variety of clients in the entertainment industry, including artists, musicians, songwriters, record producers, DJs, artist managers, radio stations, television stations, new media companies, record and publishing companies, film and television producers, advertisers, actors and reality TV talent, radio talent, and literary authors and publishers. The Music Law 101 series provides a survey introduction to the laws in the United States relevant to the music industry, is not intended as and shall in no way be construed as legal advice or a legal opinion on any specific set of facts or circumstances, and shall not be construed as creating an attorney-client relationship.