Understanding The Compulsory License and How It Applies To Digital Transmissions Under The Music Modernization Act (MMA)

Under the US Copyright Act, Section 115 provides for a compulsory license to make and distribute sound recordings subject to certain terms and conditions of use. Under the compulsory license procedures, an artist need not ask the songwriter or music publisher for permission to make a recording nor negotiate a license fee. Instead, an artist merely informs the publisher of the recording and agrees to pay royalties as music is sold at the rate set by statute. Once a song has been recorded and distributed to the public on recordings, any person or group is entitled to record and distribute their own recording of that song without obtaining the copyright owner’s consent, provided they pay the statutory royalty and abide by the copyright law requirements.

In order to take advantage of this compulsory license, a notice must be sent to the copyright owner and then monthly accountings made thereafter. In order to obtain a compulsory license, you must (1) serve a timely Notice of Intention to Obtain a Compulsory License (NOI) on the copyright owner; and (2) make monthly royalty payments to the copyright owner. The fee for physical recordings is currently 9.1 cents per song (or 1.75 cents per minute of playing time) while the digital streaming compulsory license fee is a small fraction of that amount. To verify the current rate, check the Copyright Office's guide to compulsory licenses (On the site, you can click “Mechanical Royalty Rate”).

The Music Modernization Act (“MMA”) changes the Section 115 compulsory licensing process for digital music providers from song-by-song licensing to blanket licensing.  Prior to the MMA, song-by-song licensing required digital music providers to identify and locate, serve a notice on, and make payments to the copyright owners for every song on the provider’s service.  This is a huge task, and many lawsuits were filed against digital music providers alleging noncompliance with the song-by-song licensing requirements.  The MMA changes this approach to a blanket license that is administered by a new organization, the Mechanical Licensing Collective (“MLC”).  The blanket license is essentially a one-stop-shop for digital music providers.  The MLC will establish and maintain a comprehensive public musical works database, match works used by digital music providers, collect royalties from digital music providers, and distribute royalties to copyright owners.  The new blanket license became effective on January 1, 2021. 

The compulsory license provisions for recording music apply only to the use of the song for non-dramatic musical compositions. You could not, under the compulsory license, use it for dramatic purposes, such as in an opera or an overture to a musical. The compulsory license applies only to audio-only sound recordings distributed to the public. Therefore, it cannot be used to record a song for use on a television show or movie soundtrack. In such a case, permission would need to be obtained directly from the copyright owner.

Wallace Collins is an entertainment lawyer specializing in entertainment, copyright, trademark and internet law. He was a recording artist for Epic Records before attending Fordham Law School. www.wallacecollins.com