Lingo - Licensing

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Compulsory Mechanical License

A license provided by the Copyright Law allowing anyone to record a song that has previously been commercially recorded with authorization, as long as they pay at least the royalties set by a Copyright Arbitration Royalty Panel. The royalty rate for 2004 is $.085 per song for each CD or tape made and distributed, or $1.65 for each minute of playing time, whichever is greater. The rates for subsequent years are listed under STATUTORY MECHANICAL ROYALTY RATE.

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Direct License

In reference to performing rights, a license obtained by a music user directly from the copyright owner allowing the user to publicly perform the licensed work.

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A license is a grant to a “user” permitting use of a copyright for any of the following:
1. Mechanical (records, tapes, CDs).
2. Non-dramatic performance (public performance of a song over radio/TV/club/hotel/concerts).
3. Grand Rights (dramatic performance of a musical work, musical comedy, play, opera, operetta, or ballet).
4. Synchronization (the use of a musical composition on the soundtrack of an audio/visual work for theatrical exhibition or television).
5. Print (sheet music, folios, songbooks or other printed editions. The grant is usually made for a specified period of time and for a designated territory).
6. Commercial (the use of a musical composition as part of an advertisement).

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Mechanical License

The license issued by a publisher or his agent, usually to a record company, granting the record company the right to record and release a specific composition at an agreed-upon fee per unit manufactured and sold.

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Per-Program License

A license agreement available for broadcasters from a performing rights organization such as BMI in lieu of a blanket license. A per-program license bases its fee upon revenues from only those programs using music licensed by that organization.

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Statutory (Compulsory) Mechanical License Rate

The compulsory mechanical license rate has been in existence since the 1909 Copyright Act. The statute places a ceiling—per record, per song—on the royalty a copyright owner can obtain (the royalty rate of 2 cents remained the same from 1909 to 1978). Provision was made, under the 1976 Copyright Act, for a periodic review of the rate. Such a review took place in 1980, whereby the royalty rate was increased in yearly increments. The statutory rate for 1999 is 7.10 per song for each copy of the CD or tape distributed or 1.35 per minute of playing time, whichever is greater. For subsequent years, the mechanical rates will be as follows:

2000 and 2001: 7.55 per song or 1.45 per minute

2002 and 2003: 8 per song or 1.55 per minute

2004 and 2005: 8.5 per song or 1.65 per minute

2006 and later: 9.1 per song or 1.75 per minute

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