What is a compulsory license?

The Copyright Act provides for compulsory licenses, sometimes referred to as mechanical licenses, with regard to sound recordings of protected non-dramatic musical works (which means that compulsory licenses do not apply to musicals or soundtracks). A party who obtains a compulsory license can make and distribute sound recordings without seeking the explicit permission of the copyright holder. However, there are four requirements which must be met for someone to obtain such a compulsory license. First, the copyright owner must have already made or authorized a recording of the work (thus, the author retains the right to be the first to make a recording). Second, the party seeking the compulsory license must be intending to use the work for private use, rather than for commercial use. Third, the party seeking the compulsory license must give the copyright owner notice of his intent to use the work. This notice must be given before any phonorecords are made or distributed, or within 30 days of having done so. Finally, the party seeking the compulsory license must pay royalties to the copyright owner.