Copyright law gives content creators certain exclusive rights over their works, including the exclusive right to reproduce, perform, or distribute it. Content creators include, for example, sculptors, writers, musicians, painters, and other creative professionals. Normally, in order for someone else to reproduce, perform, or distribute a copyrighted work, permission must first be obtained from the copyright owner.
Without obtaining permission, the user of the work faces the possibility that the copyright owner will sue for infringement and win money damages in court. This makes sense; if you were to write a book, and someone photocopied it and began selling it for profit, you would likely feel cheated. Copyright law gives you a remedy.
However, in some circumstances—known as compulsory licenses—a copyright owner’s permission is not required, provided that the user follows certain rules and pays fees set by law.
Such compulsory licenses are commonly used by satellite television providers, cable providers, webcasters, and music companies. Indeed, compulsory licenses are an essential part of their business models, allowing them to distribute and utilize content in an efficient and legal manner.
To understand how compulsory licenses operate, it is useful to consider an example, based on the music industry. Once a song has been recorded and distributed to the public on recordings, any person or group is entitled to record and distribute the song without obtaining the copyright owner’s consent, provided they pay a fee and meet copyright law requirements.
In order to take advantage of this compulsory license, a notice must be sent to the copyright owner along with a fee set by the U.S. Copyright Office, known as the statutory fee or statutory rate. The fee for recordings (in 2019) is 9.1 cents per song (or 1.75 cents per minute of playing time).
Let's say a recorded song is three minutes long, and an artist makes 10,000 compact discs containing the song. The fee paid to the song’s owner would, in such a case, come to $910. Note that these rates are subject to change each year, so be sure to check the Copyright Office's latest fee schedule.
A recording artist is not required to use the compulsory license, and many recording artists seek permission directly from the song owner and negotiate for a lower rate. This is particularly common in situations where the companies or artists have a working relationship.
Remember that the compulsory license for recording music (known as the mechanical license) authorizes the use of the song only for nondramatic 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 phonorecords (sound recordings) distributed to the public. Therefore, it cannot be used to record a song for use on a television show’s soundtrack. In such a case, permission would need to be obtained directly from the copyright owner.
Under the terms of a compulsory license, the licensee is permitted to make a new arrangement of the composition as long as the basic melody or fundamental character of the work is not altered.
In a different context, and without regard to the type of work involved, the concept of a compulsory license can arise in a copyright infringement action. A court has the power to order a copyright owner to grant a license to an innocent infringer instead of ordering the infringement stopped.
Finally, in countries that subscribe to the Universal Copyright Convention (U.C.C.), including the United States, an author may be required to grant a compulsory license to a subscribing government to translate his or her work into that country’s primary language if no translation has been published within seven years of the work’s original date of publication. This rule precludes copyright owners in most countries from preventing the translation of works covered by their copyrights into different languages.
Compulsory licenses are easier to understand by considering examples. Imagine that Fran writes and releases the song “Up the Stairs.” Later, Cappy decides she wants to record “Up the Stairs” exactly how Fran performed it, taking Fran's version directly. If Cappy is willing to pay the statutory fee, she does not need to ask Fran for permission—but if she wants to pay less per copy, she must obtain permission from Fran.
Another example: Imagine that Sammy composes and records a country ballad. Later, Pauline, a punk rap star, acquires a compulsory license and records Sammy’s song, but changes the words and eliminates the melody. Sammy can have Pauline’s compulsory license revoked and prevent the recording from being distributed further or played. As explained above, this is because she chose to edit the song, rather than replay it "as is."
In this way, the compulsory licensing system minimizes the transactional costs for using these phonorecords, benefiting creativity and the economy. Individuals and businesses can safely reuse creative content without worrying about liability, so long as they are willing to follow these rules and pay the license fee.