Follow TheAnalyzt on Twitter

Tuesday, January 25, 2011

Music and Money - Understanding Mechanical Rights pt 2

As an artist, a “mechanical license” is critical when you record any song you don’t control completely, and for a songwriter, it’s an important source of revenue.

The mechanical right secures the right (normally of the publisher/songwriter) to mechanically “fix” a song onto a recording medium and reproduce it, such as on a CD or a digital download. A license is required for anyone else who wants to reproduce the song, like a record label. This generates royalties for the music publisher and songwriter.

Looking at mechanicals from the recording artist perspective, if you record a song you do not completely control (meaning that if you wrote the song, you have assigned the rights to a publisher or it is a song written by someone else), you need to obtain a mechanical license or you will be in violation of copyright law.

There are three ways to obtain a mechanical license: 

1. Directly from the music publisher. 
2. Through a licensing agent such as The Harry Fox Agency (HFA). 
3. You can obtain a compulsory license as described in section 115 of the U.S. Copyright Act.

Royalty Rate:
The royalty that is paid for the recording is based on its length and the number of times its reproduced. Under current U.S. copyright law, the mechanical royalty rate is 9.1¢ for a composition five minutes or less in length, or 1.75¢ per minute for songs over five minutes, rounded up to the nearest whole minute. This is then multiplied by the number of copies of the recording that are manufactured. So, for example, for 500 copies of a recording of a composition that is 5 minutes and 30 seconds long, the math would be: 6 x $ 0.0175 = 0.105 x 500 = $52.50.

Fair Use:
Copyright law contains a concept known as “fair use,” which permits the use of a song without obtaining a mechanical license, but this is much more limited than most people realize. Fair Use is generally considered to apply to purposes such as the use of excerpts for criticism, news reporting, teaching and research. You still need to obtain a mechanical license if you are, for instance, making a recording for charity. Once you obtain the appropriate mechanical license and pay the full royalty rate, you cannot be prevented from recording the song (so long as it is not the first time the song has ever been recorded and distributed).

Licensing Request:
As a songwriter, if you have signed with a music publisher, how your mechanical licensing and royalties will be handled will probably be outlined in your contract. If you have not assigned your publishing rights yet, you’ll need to handle any mechanical license requests that come your way.

One way to do this is to affiliate with a mechanical licensing agent such as HFA. You then register your song catalog with them, and you can direct any inquiries to the agent. HFA requires that licensees pay royalties on a quarterly basis. The HFA mechanical license also gives the company the right to audit the licensee to make sure the payments true up to the actual quantity distributed. HFA also has reciprocal agreements with similar agents around the world, so it can handle your royalty collections on a global basis. For this service, HFA takes a commission on the royalties it pays out to you. However, some of its licensing services are provided on a commission-free basis.

It’s important to note that “mechanical” does not just mean CDs and other physical products. A mechanical license is required for many digital uses – permanent downloads, limited downloads, on-demand streams, ringtones, ringbacks, and more. Right now, only permanent downloads fall under the current statutory royalty rate.

Whether you’re a recording artist or a singer/songwriter, understanding mechanical rights and licenses can save you from any unexpected complications when trying to get paid for your work. As always,

Stay Hip Hop! Peace.

Article published by Michael Simon General Counsel at The Harry Fox Agency (HFA).

No comments:

Post a Comment