Mechancial Licenses
A mechanical license gives a record company or other party the right to reproduce your song onto a record. You might negotiate this license directly with the person who wants to record your song. Alternatively, the person who wants to record your song may obtain a compulsory mechanical license.
The compulsory mechanical license is a creation of the United States Copyright Act. Here's how it works. Once a song has been commercially released, anyone may make another recording of that song and sell copies of his recorded version as long as he pays the song's copyright owner the license fees set by copyright law. In order for a compulsory mechanical license to be valid, the copyright owner must have authorized the commercial release of the song, and the song must be non-dramatic. While the Copyright Act doesn't provide a specific definition for the term "non-dramatic song", most people think of it as a song that's not from a musical or an opera.

The Copyright Office periodically modifies the compulsory mechanical license rate. The current compulsory mechanical license rate, also called the statutory rate, is 9.1¢ per song per record for recordings of up to five minutes. If the recording is more than five minutes, the rate is 1.75¢ per minute per record. This statutory rate is effective through December 2007.

Despite the existence of the compulsory mechanical license, most mechanical licenses are in fact negotiated. That's because the notice and accounting requirements of the compulsory mechanical license are quite cumbersome. Also, many artists record songs that have not been previously commercially released and, as a result, are not available for compulsory licensing. Nevertheless, the statutory compulsory mechanical license rate still has substantial importance because it provides a guideline for setting the negotiated license fee.

Many songwriters or their music publishers use the Harry Fox Agency to negotiate and issue their mechanical licenses, and to collect the corresponding license fees. The Harry Fox Agency charges a fee equal to four and a half percent of the mechanical license fees they collect.