The Music Licensing Quagmire - Part 1 - A Primer
As we were preparing to record our worship CD, there was one thing that we knew right off: since we were going to be doing "congregational favorites" (i.e. cover tunes) we would need to properly license the music. As the CCLI "licensee" at our church, I felt it was incumbent upon me to make sure this was done properly - in other words, do it myself.
I began this foray into the wild world of music licensing in November. Since we are recording our own performance of someone else's compositions for distribution on physical "phonorecords" (a term which includes CD's) we need what is call a mechanical license. A mechanical license is what is needed to produce a mechanical copy of the record.
Mechanical licenses are pretty unique when it comes to music licensing. There are a vast array of different types of music licenses... licenses for using music in a public performance, for broadcasting that performance, licenses for adding music to videos, for streaming music, for playing music on the radio... you name it, there's a license for it. Each of these licenses is negotiated between the copyright holder and the licensee. This is usually done by a copyright administrator. The copyright holder may not be the composer of the song.
For example, we are using a couple of Hillsong tunes. Let's take "From the Inside Out." The song was written by Joel Houston. The copyright holder is Hillsong Publishing in Australia. The copyright administrator is Integrity Media Inc. in the U.S. So Integrity is ultimately who we need to get the license from.
I said mechanical licenses are unique. There are two reasons. First, a copyright holder cannot prevent you from recording and selling a composition they own the rights to, as long as you pay royalties on it. They can refuse to issue you rights to put a song in a video or movie, or to write it into a play or to broadcast their recording of it. But they cannot stop you from covering it.
You are entitled under U.S. law to what is called a compulsory mechanical license. In other words, you can make the recording, sell the records, and send them the royalty check, as long as you give them legal notice you intend to do so. In fact, many publishers request that if you are only making a small amount of copies, that that's just what you do - "don't bother us, use a compulsory license." The difficulty with compulsories is the reporting requirements; you must send a monthly statement and payment, and you must have a C.P.A. send a yearly statement. What a pain.
The other difference with mechanical licenses is the royalty rate. This is how much you pay copyright holder to use the song. In the U.S., the royalties for mechanical rights are set by statute, they're not negotiated. For a song under five minutes, the royalty is 9.1 cents per song per copy. (If a song goes over five minutes, it's based on the length, but the formula is still set by law.) So for our CD, which has ten songs, we are paying 91 cents for every CD we press in royalties.