Compulsory Licensing: When Music Use Bypasses Direct Permission from Owner
When the law allows use without direct permission.
Disclaimer: This Article is for general informational purposes only and does not replace legal advice for specific situations.
TL;DR
Compulsory Licensing is a legal mechanism that allows someone to use a copyrighted work without directly negotiating permission from the copyright owner, provided they comply with statutory conditions and pay regulated royalties.
In music, Compulsory Licensing most commonly applies to cover songs and mechanical reproductions. While they limit the copyright owner's control, they ensure access, competition, and continued circulation of creative works. Understanding how Compulsory Licensing works is essential for artists, labels, digital platforms, and music distributors operating in global markets.
What Is Compulsory Licensing?
Compulsory Licensing is a statutory exception to the exclusive rights normally granted to copyright owners. Under Section 106 of the U.S. Copyright Act, the owner has 6 exclusive rights [1]. See more: "Exclusive Rights in Music in U.S Copyright Law".
Compulsory Licensing operates as a statutory limitation on that exclusivity.
Instead of: "You must obtain negotiated permission"
The law says: "You may use the work if you comply with statutory requirements and pay regulated royalties"
It is not free to use. It is regulated use without discretionary refusal by the owner.
In the United States, the most well-known example in music is the Mechanical Compulsory License under Section 115 of the U.S. Copyright Law, which allows the making and distribution of cover recordings once a musical work has been lawfully released.
The U.S. Mechanical Compulsory License
Section 115 US Copyright Law provides a Compulsory License for: "Making and distributing phonorecords of a nondramatic musical work." [2]
A Compulsory Mechanical License becomes available if:
- Prior Distribution: The musical work (Composition) has already been distributed to the public in the United States with the copyright owner's authorization.
- Integrity of Works: The new Sound Recording does not change the basic melody or fundamental character of the work.
- Strict Compliance: The user complies with statutory notice and royalty payment requirements.
Once these conditions are met, the copyright owner cannot refuse the license.
Note: Section 115 applies only to musical works (Compositions), not to Sound Recordings. Recording a cover does not give you any rights in the original master recording.
Key legal requirements for Compulsory License
| Legal requirements [3] | Description |
|---|---|
| Notice of Intention (NOI) | The person seeking the license must: (i) Serve a Notice of Intention on the copyright owner (or file it with the Copyright Office if the owner cannot be located) AND (ii) Do so before or within 30 days after making and distributing phonorecords. Failure to properly serve notice may invalidate the license.Note: Since the Music Modernization Act (2018), digital audio services in the U.S. obtain blanket Mechanical Licenses through the Mechanical Licensing Collective (MLC), rather than serving individual Notices of Intention. |
| Statutory royalty rate | The user must pay the statutory mechanical royalty rate set by law (adjusted periodically). This is not negotiated, it is regulated. |
| Monthly accounting & Reporting | When the copyright owner is known, Licensees must: (i) Provide monthly royalty statements; (ii) Maintain accurate records; and (iii) Pay royalties on time. Non-compliance can terminate the license. |
Why Compulsory Licensing exists
The policy objective behind compulsory licensing is structural balance within the copyright system.
In the context of music, this mechanism supports a competitive recording market. Once a musical work has been lawfully released to the public, no single copyright owner can monopolize who is allowed to record it.
As a result, compulsory licensing promotes interpretative diversity: multiple artists may create their own versions of the same song, while the songwriter continues to receive royalties.
Practical Takeaways
| An Artist recording a cover song in the U.S. | You likely need a Mechanical License under Section 115 (or through the Mechanical Licensing Collective - the MLC). |
|---|---|
| A Brand using a song in advertising | Compulsory licensing does NOT apply. You need negotiated sync rights. |
| A Label distributing music | Failure to comply with notice and royalty rules can expose you to infringement claims, even if the work qualifies for C ompulsory Licensing. |
REFERENCE
[1] Section 106 of the U.S. Copyright Law;
[2] Section 115 of the U.S. Copyright Law;
[3] Circular 73 of the U.S. Copyright Office.
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