Music Licensing, Copyright and Royalties
by Alex Cosper

For more information on copyrights and licensing visit Stanford Copyright & Fair Use Center, Musicians' Intellectual Law and The Rights Workshop. For broader licensing visit GYL.com.

Copyright lasts life of author + 70 years, then the work enters public domain

Music licensing can be complicated and confusing, especially if you are unfamiliar with these basic terms: licensor, copyright law, performance rights, mechanical license, compulsory license and digital license. Who needs music licensing? Anyone who wants to make a profit off copyrighted music, which includes webcasters, night clubs, motion picture producers and recording artists doing cover songs.

There are a few easy paths to licensing in some cases. If you want to start an internet radio station, for example, you can sign up with an aggregator such as Live365.com or Shoutcast.com, which includes licensing in their hosting fees. One way to bypass licensing all together is to play just independent artists who directly give you permission to play their music royalty-free in exchange for exposure. Another way to use royalty-free copyrighted material is exploring CreativeCommons.com or ProductionTrax.com.

Reading up on copyright law is the first basic step to understanding music licensing. Here's a quick history: the law was updated by Congress and signed by President Ford with the Copyright Act of 1976 and 1978. The Digital Millennium Copyright Act of 1998 (DMCA) signed by President Clinton further updated the law to take into account the digital and internet revolution. The purpose of copyright law is to protect owners of music, which is usually songwriters or publishers.

The DMCA makes it clear that consumers are not allowed to illegally download music or to make digital copies available to the public without permission. The major record labels, represented by the Recording Association of America (RIAA), went on a suing spree to try to recoup losses from illegal peer to peer file sharing sites like the original Napster in 1999.

Even purchasing music legally does not grant you to do whatever you want with the music. When you purchase music you own the media that stores the music, not the music itself. You are not allowed to distribute digital copies of the recording unless you have permission from the owner.

Copyright registrations are awarded by the U.S. Library of Congress at Loc.gov for owners who submit the proper forms and pay fees. The term of copyright ownership, as set forth by the Copyright Act of 1976, is the lifespan of the creator plus 70 years then the song either enters public domain or the copyright is possibly extended, depending on various factors. Songwriters can copyright their songs themselves, or start their own publishing company and copyright the songs or simply have another publishing company handle all the paperwork. Licensing agreements can be registered via Copyright.gov.

The lyrics and melody of a song is called the "performance" regardless of who recorded it. In other words, performance means the raw unrecorded words and music as it exists on sheet music, although creating sheet music is not necessary. Publishers are represented by Performance Rights Organizations such as ASCAP, BMI and SESAC, who exist to collect royalties for copyright owners. When an artist performs a song at a live venue whether it's a cover or original, it is the venue's responsibility to pay royalties to the performance rights organization.

Performance fees make up only one part of royalty payments if you want to broadcast or webcast music. In addition, you will need a "mechanical license" which allows you to play the "sound recording" of the song. This license also establishes limited rights by vendors who want to make copies of a recording for private use. The recording is usually owned by a record label and sometimes an artist or producer. A mechanical license can be acquired from Harry Fox Agency in many cases.

If you are an artist looking to do cover songs, royalities for live performance at a venue are paid for by the venue. But recording a cover song requires permission from the publisher, which you can find at the websites of ASCAP, BMI or SESAC. You can also track down publishers at MPA.org, the site of the Music Publishers Association. In some cases a "compulsory license" can satisfy the right to record a cover song. A compulsory license lets non-owners of a song have limited rights without permission, although fees might still be required. The best plan of action is to check with the publisher before taking action.