I had a session today at Razzy Bailey's studio. Here's some info on him:

http://en.wikipedia.org/wiki/Razzy_Bailey

Razzy said major label producers would not cut a demo on a song pitched to them without securing a "hold" on it. They wouldn't want to spend money on it only to find out that in the meantime, someone else had it on hold.

He then related the story of a singer who brought him a song that was pitched to her from a publishing company. She wanted him to record her on it right away as a vocal demo. Razzy said she'd have to wait until he secured a hold on the song, they gave him six months, which he told me he thought was long for an independant label. He said three months was more usual for independants, but a longer time would not be unusual to hold for a major artist.

Razzy also said he wasn't a lawyer and didn't know what the legal ramifications were, only the general business practices.

However, this strays a bit from the original question, whether one needs to secure mechanical license for a demo. It looks like no, if you get a hold on an uncut song. I have no idea what the legality is on a cover song.

All the Best,
Mike

You've got to know your limitations. I don't know what your limitations are. I found out what mine were when I was twelve. I found out that there weren't too many limitations, if I did it my way. -Johnny Cash

It's only music.
-niteshift

Mike Dunbar Music