JPF Home Page Forums General Messages Mentor Questions Forum Compulsary Mech License - anybody done this?

Hi,

Maybe I am stupid, but I am intensely curious about this subject. I have always wondered about "compulsary licenses" and who would actually invoke one due to the accounting costs, except for a larger player/company. I posted this on another site, I think I will post it here to. Any thoughts or insights are appriecated.

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Hi,

I am interesting in hearing from anybody who has invoked a compulsary mech license for a song as laid out in section 115 of Title 17 (Copyright Law) and Copyright Office circulars. Not signed an agreement with a publisher, but instead informed the publisher via registered letter you were going to record and distribute their song, and then followed through with the monthly and yearly statements and CPA review that is required to do this. That HAS to cost money (the statements and CPA review) and I am wondering how much (I have a guess) and if there are any organizations that will do this for a fee for indie artists. And, how long do you have to keep sending the statements? For how many years? Copyright Office doesn't say.

What is really fascinating about this is that now that we are moving into digital downloads, the law (and I am not a lawyer - so consult one before trying this) in section 115 appears to treat phonerecords and digital phonerecords as one in the same. Meaning, instead of hassling with publishers (some of whom up until now have been picking and choosing which sites to issue digital mech rights for) or Harry Fox for a DPD license for a digital mech rights, you can invoke a compulsary license and get both physical and digital rights to distribute to where and to whomever you choose.

Any thoughts on any of this stuff?

Thanks.


[This message has been edited by Liszt Laughing (edited 10-03-2003).]

I think may last post might have been confusing. Here is what I am asking anyone to input on/debate:

1) If anybody has invoked a compulsary license on a publisher for PA rights, I'd be interested in hearing the details.
2) There seems to be confusion amongst the usual players in the PA mech license game about how to handle digital mech rights. Publishers have been issuing DPD (digital phonerecord delivery) licenses which grant digital mech rights on a pick and choose basis. The way around that would seem to be compulsary license law, which appears to grant a blanket license to distribute to whomever and whereever in both the physical and digital realm. I think we are about to hear alot about this.

Any thoughts????

Thanks

Doug.




[This message has been edited by Liszt Laughing (edited 10-03-2003).]

Hi Friends,
Here's how it usually works. Once a song has been recorded and released anyone may record and release the song as long as they pay the mechanical licence fee to to the copyright owner, usually a Publisher. The compulsary part is that the copyright owner has to issue the licence. This only comes into play after a song has been released. Until that time the copyright owner can refuse to issue a mechanical licence, if he wishes. I took the time and trouble to set up a mechanical licence for a small publisher I work with. In this case the licence is paid for before it is issued with all the details of song title and how many copys will be manufactured. It is pretty simple really. Currently the mechanical rate for songs up to 5 minutes is 8 cents per copy. There is an additional charge for songs over 5 minutes. Look on the Harry Fox site for more info. Mechanical rates are set by the U.S. Congress. These rates are good to the end of the year when congress may change them. Hope this helps.

The publisher can refuse to issue a license after first publication also. In that case, you would have to invoke a compulsary license as outlined in section 115 and circular 73 if you wish to use the song. Although most mech licenses are modeled or shaped by compulsary law, if you obtain a license from the publisher directly, I would consider that a voluntary license. A true compulsary license is one you "force" on the publisher by invoking compulsary license law.

Hey Liszt,

For our last album we did a cover of "Eleanor Rigby" We got our license by going to the Harry Fox Agency via discmakers. If you are doing a smaller initial release like ours (up to 1500 copies, I think) then you can get the license automatically over the web and they send you the physical license later. It cost us 80 dollars for a 1000 run production. There are some other rules that apply, but it was really easy and we haven't had any problems.


I hope this is what you were talking about. It's a completely different story if you actually want to take the original recording and distribute it.

Hope this helps.

Thanks,

Steve

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www.bordercrossingmusic.com

Hey Steve and Ray,

Thanks for your answers. That web licensing at Harry Fox seems pretty cool and easy, I've checked it out before. But, this is not really what I am trying to get at. I think I got my questions answered at another site, but at the risk of being boring, I'll post what I wrote over there that gets more to what I as asking.

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*** remember, this is my opinion, and I am not lawyer ***

I think I might have made you guys misunderstand me - I am not trying to do a compulsary license, I was wanting to hear the details if anybody had served a compulsary license on a publisher, and to debate a few things...

Indypub, thank you very much - you answered my questions as I thought a publisher would see things.

A few more questions, if you have time. In the physical realm, don't you sometimes deny a mech license to small runs/artists? And, didn't you post awhile back that in the digital realm, publishers have been picking and choosing who and where to issue DPD licenses too? Has anybody ever served a compulsary license on you? Or is this highly unusual?

See, here is the deal. The only thing I would dispute about anything you said was that if you read the law, if I were to put a cover song on a digital phonorecord, and offer the digital phonerecord for paid downloading with no express usage terms stating a user could make x number of copies from that one paid download (they pay for one copy and that's the only copy they can expressly have - just as if they bought a physical CD), I CAN serve a compulsary license upon the publisher for a mech license for that song. The law clearly extends compulsary license rights to phonorecords and digital phonorecords. But, because all the immerging digital download sites have usage terms that expressly allow a customer to make x numbers of copies from that one paid digital download, then just as you said, you would ALWAYS have to approach the publisher or Harry Fox for a mech license. Under those circumstances, you could not serve a compulsary license. So, there is effectively no compulsary license law in the digital realm.

Now, correct me if I am wrong, but in the physical realm, a publisher can deny a mech license, or make you buy a license for x numbers of copies, or even ask for more than the statutory rate. If a person didn't like that, the ball would be in thier court to do the work to serve a compulsary license on a publisher. Now, because there is effectively no compulsary law in the digital realm, because the usage terms of the immerging sites morph one copy into several, doesn't this mean there is effectively no constraint on how a publisher can license? And no recourse if a person didn't like the terms? A publisher can deny or make the license however they want to. Compulsary law was put there so that people could use the music, but it effectively doesn't exist in the digital realm as it is being developed.

And - may we not see somebody challenge this? Because I have a right supposedly by law but protected by court precedent to make a "fair use" "personal copy" of a physical CD, won't that right extent to a digital CD? And if so, couldn't the usage terms of a digital download be construed to be just allowing the "fair use" "personal copies" that a person is entitled to??

**** NOTE 10/03/03 - I will leave this message as is - but I now don't believe the usage terms issue to be a valid point. The pain about thinking outloud on a message board is that it leaves all of your ideas, good or bad, out there after you have come to a more accurate conclusion. You can serve a compulsary license on a publisher for digital mech rights, no matter what the usage terms say. I believe that any copyright issues of the usage terms are ignored purposely by publishers, because the alternative would be no usage terms, meaning no restraint on how a user would use the digital phonorecord. The bigger issue with publishers is WHERE the digital download is distributed. What web sites do it. ****



[This message has been edited by Liszt Laughing (edited 10-03-2003).]

This is what I have come to think of this stuff now...guess I'll follow up since I posted here.....so I'm not leaving inaccurate ideas...
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The term "compulsary license" has come to mean two different things, and I think you are going to get a zillion e-mails about this unless you clearly differentiate between the two...

Let's start with this. This is from Circular 73:

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DOES THE INTENDED USER HAVE
HAVE TO USE A COMPULSARY LICENSE?
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NO. The person wishing to make and distribute phonorecords of a nondramatic musical work may negotiate directly with the copyright owner or his agent...

*** A) my notes: this is what you are doing when you write or talk to Harry Fox or the publisher directly and ask for a physical mech license or a digital mech license (DPD). Just a letter or call saying - hey I would like to get a license. This is also what you are doing when you buy a license for 500-2500 units on songfile.com. You are negotiating directly with the copyright owner or his agent. Many times people call this obtaining a "compulsary license", but this term is really inaccurate. HF or the publisher may give you a license (after asking you for info some of like is found in the "Notice of Intention to Obtain a Compulsory License for Making and Distributing Phonorecords" letter), the license may use the statutory rate (you may be able to negotiate a better rate), some other things may be similar to what is found in the regulations in TITLE 37, and the publisher (or publisher thru Harry Fox) may give you the license BECAUSE section 115 is in the law, but this is NOT a compulsary license. It is not, because it has not INVOKED the requirements of section 115 to "force" a license on the publisher. This is a VOLUNTARY license. If you have negotiated a license with the publisher or thru FOX with the publisher in any manner besides sending the "Notice of Intention to Obtain a Compulsory License for Making and Distributing Phonorecords" letter, you have made a VOLUNTARY license, not a compulsary license. This is the way almost everyone up until now has made thier mech license - voluntarily. ***

...continue from Circular 73...
But, if the copyright owner is unwilling to negotiate or if the copyright owner cannot be contacted, the person intending to record the work may use the compulsary licensing provisions of the copyright law.

*** B) my notes: NOWWWWWWWW - we get to a true compulsary license. By sending off the "Notice of Intention to Obtain a Compulsory License for Making and Distributing Phonorecords" letter, you INVOKE section 115 and "force" a license on the publisher. And, as I understand this - the publisher does not send you anything back. You have exercised the license by sending this letter. IF you send the letter with contents exactly as outlined in TITLE 37. Now, I did some research, and I saw several variations of this letter. Some actually ask the publisher to send back a license, and tell what rate they want to pay and for how many copies. I really don't know what to make of that, other than these are not truly letters that INVOKE 115. These are letters that are ASKING for a voluntary license in a manner that looks like a compulsary license. I mean really, if I send a letter titled "Notice of Intention to Obtain a Compulsory License for Making and Distributing Phonorecords" and it has content other than specifically outlined in TITLE 37, like how many units I want, and "please send the license back to me" what have I really done legally? Have I invoked 115, or have I just asked for a license, which the publisher can voluntarily give me or not? The law is perfectly clear, but there seems to be a gray area in how it is actually applied in real life.

But, in any event, it's REALLY, REALLY important that people understand that by sending this "Notice of Intention to Obtain a Compulsory License for Making and Distributing Phonorecords" letter, with content as specifically outlined in TITLE 37, they are not ASKING (as in negotiating with) the publisher for an inaccurately termed compulsary license in the sense of A) above, they are TELLING the publisher I am INVOKING a license on you, the terms of which are set and non-negotiable (yes - I do understand that some publishers upon being served will then send back/negotiate a voluntary license - but you have to assume they won't), and they are setting off a chain of events they are legally responsible for.

So, I'll give OPUS his props, he is right about this one. I would tell people to first ASK the publisher for a DPD license by calling, e-mailing, or writing to the publisher a simple request for a license. I would go find examples of mech licenses on the web, and send a letter with all the information the publisher would need from you. I would not however at this stage title the letter "Notice of Intention to Obtain a Compulsory License for Making and Distributing Phonorecords". A voluntary license will not have all this CPA foolishness in it, and you can probably just write a check for so many units and be done with it, depending on how many units you want.

After sending a simple request, if the publisher doesn't respond or they refuse, and you have talked to a lawyer or feel comfortable doing it, THEN send the "Notice of Intention to Obtain a Compulsory License for Making and Distributing Phonorecords" INVOKING a compulsary license. Just make sure you understand what you have just done...

Also, one other thing - about the usage terms non-sense I went on and on about - I still don't know how to accurately think about those in this context, but I do know after research that there have been fights and disagreements about all aspects of this DPD thing (like "incidental DPD's and "transitory incidental DPD's) all during the development of digital copyright content delivery (webcasts all that). I don't think the usage terms thing has even been thought about yet, and even if it is disputed - it would be awhile before it was settled by the Copyright Office with all parties - and the Copyright Office many times lets things go on as they are until a settlement is reached - so I bet it's nothing to worry about. And, it may even be a case where this has been thought about, but it's been decided if we are going to have DPD's, some restraint on how they are used by the buyer is needed, otherwise they would just let those copies fly around the world like they are now with file sharing. So, the copyright issues of the usage terms are ignored. So, again, I now think this usage terms deal is a moot point.
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*** just my opinion and I am not a lawyer ***

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Liszt Laughing? - Fantasy Of 1811
Liszt Laughing? - Brown & White Eggs Sold Here



[This message has been edited by Liszt Laughing (edited 10-02-2003).]

You were a lawyer, Liszt, in a previous life. You just dont consciously realize it. You need to be hypnotized and you'll start reciting law from another era for sure.

Herbie

hehehe. Then I was a lot richer in a previous life... hahahah....

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[This message has been edited by Liszt Laughing (edited 10-06-2003).]

Ok Liszt,

I think I get what you're saying. You are asking about an actual recording by the artists themselves? Are you wanting to serve a compulsory license on a copyright holder to reproduce and distribute their original recording. In my case, you would actually buy a copy of the Beatles album and record Eleanor Rigby on a CD and convert it to an mp3 file or something for distribution on the web? Or am I wrong again (not completely out of the realm of possibility)

If that's the case I have no experience at all with that. We didn't have to invoke a compulsory license, just paid the compulsory rate. We pretty much just went through songfile.com, looked for Eleanor Rigby, and applied for the license.

I don't know what you were referring to as far as Harry Fox not taking requests for independent artists to get licenses for cover songs. We were able to get one very easily two months ago. Again, if I'm wrong, let me know. I am very interested in what I think you're getting at.

Thanks,

Steve

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www.bordercrossingmusic.com

Hey Steve - what's up!! HF has said they don't have the time and resources to negotiate DPD licenses (mech licenses for digital phonorecords) for cover songs for indie artists for digital distribution. So, you can just serve a compulsary license on the publisher and there ya go, instant license. You need a mech license for a cover song on a physical CD, and a mech license for a cover song on a digital CD. The latter is what I am talking about.

From my personal perspective, I don't want to serve a compulsary license on anyone because you have to do monthly and yearly statements, and yearly statement review by CPA. I'm too small time to do that. So, from that perspective, I'd rather just ask for the license, in the manner of my letter above. From the larger perspective, larger indie artists, I will defer to other people's thinking that a compulsary license may be the way to go.

Make sense?

Aaaahhhh, -DING!-

The light just turned on! OK, You are talking pure digital distribution, not actual physical mechanical license for a CD. Again, something I'm not familiar with. Forgive my ignorance.

I see what you are talking about with the monthly and yearly reports. There should be some kind of software you could get to attach to your website to track downloads and generate a report for you. It doesn't sound that complicated. Number of downloads X.08 (or whetever the agreed price is)and there you go. At the end of the month you could have every artists fee calculated for them and sent out without needing a CPA. No sense renting a CPA when buying a calculator will do the same job.

Hope it works out for you.

Steve

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www.bordercrossingmusic.com

That actually is a really, really good idea. The lead distributor, since they have to produce sales statements for the artist anyway, could for a fee produce and send the monthly and yearly statements. Like you, it seems most people when they hear about the CPA deal, say - well you don't really have to do that. But if you serve a true compulsary license upon a publisher, it is required by law that the yearly statement you send be reviewed by a CPA. There IS beauty to a compulsary license. All the rules are spelled out, and it's pay as you go. Perfect for digital distribution. It certainly makes sense to do that if the publisher won't negotiate, and maybe it does make sense for a better selling indie artist to do that at the onset rather than asking for a voluntarily negotiated license first (which probably won't include the CPA stuff), and THEN going compulsary if the publisher won't give a license. From my small time perspective, I personally would choose to ask the publisher first, in the manner of my letter above.

One more thing...then I'm done...because I found out what I wanted to find out.

If someone should offer advice that a compulsary license is the way to go, you should consider that advice absolutely, especially over anything I say. I am not trying to shoot down anyone's advice. You should always discuss these matters with someone like an attorney or a consultant.

Thanks.

Dear Friend,
For a beter understanding of the Compulsary provisions of the Copyright Law go to http://www.aracnet.com/~schorni/index.
Go down and click on Copyright Circular 73 and read Compulsary licening provisions. You should note that licening provisions are set by law and not at the whim of a Publisher as well as mechanical rates. The mechanical rates are due to be re-visited by the U.S. Congress and may be ajusted in 2004.

Sorry,
To get to the above link you will have to go to http://www.lyricist.com and go down to Legal/Business and click on Law and Resources near the bottom of the list.