A compulsory cover license allows an artist to legally sell their rendition or "cover" of another song based on a set royalty payment scale. A compulsory license is obtainable for any song that has already been previously recorded and sold with the consent of the original musical composition copyright holder.
Unlike a traditional music copyright license, the terms for a compulsory cover license are established by the U.S. Copyright office rather than the artist or record label. This includes set royalty percentages and payment schedules. Also, a compulsory cover license does not require negotiations with the original musical composition copyright holder. In other words, you can obtain the right to sell a cover version of a song without ever having to gain the consent of the original artist.
Getting a compulsory cover license is four step process that includes the following:
- Identify the holder of the musical composition copyright of the song to be recorded: This can be done by personally searching the records of the U.S. Copyright Office. The Copyright Office can also conduct the search for a nominal fee.
- Send a "Notice of Intent to Obtain a Compulsory License" form to the copyright owner 30 days before sale of the cover song: This notice tells the copyright holder that you will be selling a cover version of their work, formally establishing a compulsory cover license. Note that a separate letter must be used for each song, even if it’s the same artist.
- Make royalty payments, with accompanying account statements, on or before the 20th of each month
- File an annual statement of total sales of the recording, certified by a public accountant
It is important to emphasize that a compulsory cover license does not require any action on the part of the copyright owner. Once a person satisfies the four steps above, they are legally entitled to sell their cover version of the song.
Yes, if the cover alters the original song in any significant way. The compulsory cover license only applies to covers that are consistent with the original rendition of the song. Therefore, remixed or off-the-wall covers of songs may not be applicable under a compulsory cover license.
If you are looking to produce and distribute a cover version of a copyrighted song, you should contact an business attorney to learn more about compulsory cover licenses. A lawyer can help you construct a proper "Notice of Intent to Obtain a Compulsory Licens" form, and inform you about current royalty rates. An intellectual property attorney may even be able to help you negotiate with the original artist for better licensing rights and lower royalty costs.