What are Mechanical Royalties?

by SaskMusic

July 31, 2009 in Doing Business

"How Do I Record a Cover Song?"

As a songwriter, you automatically own the copyright to any songs you write. If someone wants to record a song you've written, they must ask you for a Mechanical License, and pay you a fee.

As a performer, if you want to record a song that someone else has written, you must obtain a Mechanical License from whoever owns the copyright (whether that's the songwriter, or music publisher, or both etc.) and pay a fee for its use.

The quick explanation to "How Do I Record a Cover Song?":

1) You'll need to know the actual title of the song, and hopefully the songwriters (especially important if the song has a common title).
2) Look this information up on the CMRRA website database (www.cmrra.ca) to see if the song is listed as "Represented".
3) If it is, you can submit an application for a mechanical license through them, and it's pretty cheap and easy. Done.
4) If it isn't in their database, call CMRRA and see if they actually do represent the song.
5) If they don't...you'll need to track down the copyright owner (songwriter and/or publisher of the song) to obtain a license. This can be very difficult and take a lot of time - especially if the writer is not Canadian - if you do manage to find the owner. If you DO find the copyright owner, you will do a simple licensing contract and pay a fee to them directly. SaskMusic can advise on this process.
Also be careful when incorporating "old" melodies into "new" arrangements - this is considered a new usage and requires even more than a simple mechanical license, it'll essentially require a co-writing negotiation.
Some copyright owners cannot be found or even if they are, because the license fee is so small, they can't be bothered to return your call or process the paperwork required.

The Canadian Musical Reproduction Rights Agency Ltd. (CMRRA) is the Canadian mechanical rights collective, representing most large copyright owners (publishers) in Canada. CMRRA acts as the liaison between copyright owners and music users, issuing licenses which authorize the reproduction of music on CDs or vinyl ("mechanical licensing") and in films, TV shows and other audio-visual productions ("synchronization licensing"). Licensees pay a fee to CMRRA, who distributes the proceeds to the publisher. The publisher in turn distributes the songwriter's portion to the songwriter involved.

*Please note: as of spring 2009, CMRRA is not negotiating licensing for digital downloads, for example if you record someone's song and then sell it on iTunes. There doesn't appear to be any standard legal way to obtain a license for these right now!*

CMRRA was formed in 1975 and represents over 30,000 music publishers, issuing over 125,000 licences to more than 8,800 music users every year, including major labels, indie labels and community organizations. CMRRA is a non-exclusive agent for its publisher principals. (Publishers represented by CMRRA can enter into arrangements directly with users if they prefer. But usually, publishers allow CMRRA to issue their licenses). Membership is open to any publisher or copyright owner with respect to the Canadian use of the reproduction right in music.

In Canada, music copyrights last for life plus 50 years after the death of the last author/songwriter. i.e. if two people wrote a song, one of them died in 1950 and one in 1960, their song is "protected" until 2010.

If more than 50 years have elapsed, the work is said to be "in the public domain". There is no copyright and, in effect, no one owns it, so it's free to use as you like. A specific arrangement of a public domain work, however, is itself copyrighted for the life of the arranger plus 50 years.

Copyright is a form of property. A copyrighted work can be owned by a person or company just like other property. It can be bought and sold, in whole or in part. Whoever owns or administers a copyright is usually called the publisher. The owner of a copyright is the only person who can make copies of a work or perform it in public - or give others permission to do so. If someone does these things without the copyright holder's consent, it is an infringement of the copyright, subject to civil and criminal proceedings.

The publisher represents the interests of the songwriter and works to maximize the revenue of its catalogue of songs. The publisher usually makes a deal with the songwriter for the sharing of revenue. Often a songwriter is his/her own publisher.

The main task of publishers today is the promotion of the use of their copyrights through performance rights and reproduction rights.

(When a copyrighted song is played on the radio or TV, or performed in a theatre or concert, that's an exercise of the performance right. The publisher and songwriter get their compensation from SOCAN. CMRRA does not handle performance rights.)

NOTE: When you arrange for a mechanical license with the publisher, you have indirectly made a deal with the songwriter. You do not need to also contact the songwriter separately.

What is a Mechanical Licence?

When a user wants to reproduce a song on a mechanical contrivance (CD, cassette, vinyl, etc.) which will be made in/brought into Canada, he must pay the publisher a fee. (i.e. You want to put a cover song - a song you or your band didn't write - on your album.)

The license specifies the song title, what type of product is being manufactured, the catalogue #, playing time and performer. A separate license is needed for each song.

If the copyright belongs to more than one owner, licenses are needed from each one. (CMRRA usually represents all owners and ensures that necessary licenses are granted).

However, CMRRA does not represent ALL songs. If they do NOT represent a song you wish to license, it's your responsibility to track down the copyright holders. Make sure you have obtained permission (a mechanical license) before you proceed with recording the song, as it is not guaranteed that the CMRRA will be able to provide a license! Additionally, most manufacturers now require you to provide proof that you have obtained proper licensing before they will agree to manufacture your albums. This can hold up your entire album and/or force you to remove a song from your album track list. If you do go ahead and manufacture an album without proper licensing, and the copyright owner finds out, you are at risk for criminal prosecution, and/or forfeiting all copies made of your album.

The current standard mechanical license rate in Canada is 8.1¢ per song, per copy made, for a song of 5 minutes or less. Each additional minute or part thereof is an extra 1.62¢. A few publishers do not follow the standard, and charge a higher rate. So if you are manufacturing 1000 CDs, each "cover song" you put on is going to cost you $81.

You can obtain a Pay As You Press license (PAYP), which means you pay all royalties at the time you apply for a license, at the standard rate above (plus GST). You state how many copies you are manufacturing (or importing).

You must make application for mechanical licenses for your product before you manufacture or import them.

After you make an application, CMRRA checks to see if they represent the publisher(s) involved and, if so, issues a mechanical license to you on the terms discussed above. If they represent the publisher, but do not have the particular title on file, they obtain verification from the publisher(s) that this is its song and request correct copyright information from it. Once a reply is received, a license is issued. If the publisher or song is not represented by CMRRA you will, as noted above, have to obtain permission directly.

If you manufacture/import units containing copyrighted songs without obtaining a mechanical license for each song (from the publisher or through CMRRA), this is copyright infringement. Canada's copyright legislation provides for civil penalties and criminal prosecution with a maximum fine of $1,000,000 for infringement. A CD, cassette or LP containing unlicensed music can be removed from the market by way of injunction. As well, anyone handling infringing merchandise is likewise guilty of infringement - including distributors, wholesalers & retailers.

Every recording of a copyrighted composition actually represents two copyrights: the copyright in the musical composition itself (represented by the music publisher), and the recording of the musical work (usually owned by the producer or record company involved). If you are the producer of the original recording, it is likely you own the copyright in the master recording. If you plan to reproduce a master owned by another party (i.e. sampling), you must obtain the permission of the owner of that recording, in addition to a mechanical license.

CMRRA doesn't represent the owners of master recordings and cannot obtain these kinds of licences for you. For further info. on masters call: Audio Video Licensing Agency (AVLA), (416) 922-8727 or Canadian Independent Record Production Assoc. (CIRPA), (416) 593-1665.

- Information obtained from www.cmrra.ca.

A Side Note For Songwriters/Artists: The Controlled Composition Clause

If you are signing with a label (that will own the master of your album), they are required to pay a mechanical license fee to you/your publisher (if you are the songwriter).

To get around this they often include a controlled composition clause asking for one or more of the following:
  • they only have to pay you 75% of the mechanical rate
  • they only have to pay you for a max of 10 songs (even if you record 15)
  • they only have to pay you on "sold" goods (not promo copies)
  • they'll only pay 50% on record club sales
  • if you're doing any cover songs, they'll only pay 75% (and you'll have to cover the rest yourself!)
  • they won't pay the synch license for your videos
  • OR WORSE, they'll give you 100% on mechanicals if you give them 50% of your publishing.
While controlled composition clauses are standard inclusions in recording contracts, they are NOT ethical. You are entitled to 100% of your mechanicals, so make sure you do your homework before signing away rights that are due to you.

- Excerpt from "Legal Stuff: What You Should Know" by Marian Donnelly.

By Lorena Kelly for SaskMusic. Originally published April 1999. Updated May 29/09.

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