Background

The “mechanical license” allows anyone to make a cover of a copyrighted composition, once the songwriter or composer has himself recorded the song and distributed it. The person making the cover must pay the copyright owner a set fee for each copy of the cover “made and distributed”. Additionally, he must serve the copyright owner with a notice of intent to use the work and provide monthly payments and statements of account.

The mechanical license has been around since the Copyright Act of 1909. However, the provisions contained in Section 115 are rarely used, perhaps because the notice and accounting requirements are cumbersome. Instead, most record labels or artists who want to create covers negotiate a license with the Harry Fox Agency, a collective of composers and publishers. While Section 115 does not prohibit voluntary negotiations between parties, it does act as a ceiling on the rate that can be charged for a license.

By amendment in 1995, Congress extended the mechanical license provisions of Section 115 to digital deliveries of music—referred to as Digital Phonorecord Deliveries or DPDs. This means that whenever a service such as iTunes allows a customer to download a song, the composer of that song must be paid the either the mechanical license or a voluntarily negotiated royalty.