See, the problem with these kinds of forums is that people ask for advice, and there are two ways of looking at things. Some folks want to look at what they call the "practical" aspect (e.g. how do lots of people do things - even though they may be doing it wrong and getting into trouble) and some folks want to know about the legal ramifications and how things should be done properly.

Yes, as a practical matter, there are songs being recorded all the time without a proper license being in place. That doesn't mean its the right thing to do. It's illegal, and what Mike and I are trying to get across is that its also potentially dangerous financially and not worth the risk when you know how easy it really is to clear the rights.

Ray asks: "Mike,Why don't you ask some Producers/
Artists/Labels if they have ever recorded pitched songs for a further evaluation but not released and not notified the copyright holder"
First of all, as a practical matter, the Producer, Artist or Label probably doesn't even have access to any song they want to use without the knowledge of the author/publisher. That's why they deal with publishers and "song pitchers." The publishers, and noted "pitchers" already have the licensing for the song lined up. They are in the business of getting the best, pre-screened songs to the artist/producer, and that's how the song gets attention in the first place. That's also why unsolicited material that arrives at the record company goes stright in the garbage. If there is ever an argument that somebody sent a song to a record company and they ripped it off or used it without permission, the record company can show that its course of business is to avoid listening to anything that is not professionally presented. Furthermore, if you're a recording artist, there's usually a clause in your record deal that requires you to indemnify the record company if you don't have the rights to the material you record.
If there's a written on-hold agreement, that usually inclueds a license to record the song. It can be something as simple as a letter of intent.

The next question is - "why contact a copyright holder on a song that may never be released?" I think Mike answered this very well with his examples. I would only add that to do otherwise is to invite the sharks to go for for a swim. By the way, nothing says that you actually have to pay for the license to record the demo. This kind of licensing can certainly be done on Spec. However, the most professional way to go about it (and the way that protects everyone) is to get an agreement, in advance, and have permission to record the song.

Of course, I have not reviewed the "song submission form, permission letter, or mechanical license" referenced in the example above, however, there still appears to be some confusion (even after all the times we've posted on this topic), about what a mechanical license is. If you negotiate the license for the song, it's not a "mechanical" license. Most deals I've seen are not done with mechanical licenses. My experience has been that Recording Artists, Producers, and Record Labels are not in the habit of giving money away when they don't have to. Since they can negotiate a deal to get the song for less, major players don't use mechanical licenses. Mechanical licenses are handy when the school band wants to put out a record and sell a hundred copies, or when a minor player wants to release a recording of someone else's song in such a limited quantity that it would be a waste of time for the author/publiser to negotiate, but major players aren't going to use mechanical licenses if they can make more money by avoiding them.
Remember, the copyright holder owns the right to license the work whenever and however he/she wants to, and if it's a new song being pitched, which has not yet been published, a mechanical license isn't even available.