[ Charlie Moore wrote about new musical arrangements in 020626
 [ MMDigest and inquired about licensing and fees.  Harald's reply
 [ below was lost somewhere and wasn't received at MMD until now,
 [ two weeks late!  -- Robbie

Hello Charlie, Ed, and all --  No music arrangements this time,
but another, important topic: copyright issues in the U.S.  I have
researched this on the Internet yesterday, and I am quite sure now
what the rules are.  The following comprises:

(A) an explanation of the issues, including what we (the arrangers and
the music punchers) should and could do, and

(B) a summary of the explanations I found on the Internet that are best
in explaining the issues.

All of the (more than 100) texts I found and read, including postings
in newsgroups, do not contradict each other (although some are quite
unclear or incomplete).  This is a very encouraging sign that my
understanding is correct; but please check yourself.  Of course, what
I write here is not legally binding; it is my explanation of my
understanding of the relevant issues.

Note: I use "he" as pronoun for persons throughout this text; but of
course I mean "she or he".  I apologize for not yet having found a good
alternative to this sort of gender discrimination ...

Ad (A) What are the issues?

There are two sorts of rights involved, where the first one can be
further subdivided:

  a.  Copyrights
  a1. Copyright to produce a "phonorecord"
  a2. Copyright to produce and record a derivative work
  b.  Right to perform

Each right can give rise to a license, which allows someone different
from the rights holder to do the same thing as the right specifies
(maybe limited by special license terms).  Passing out licenses gives
the rights holder a right to a fee.  The fee can be agreed on mutually
between the rights holder and the licensee, or it can be handled
through an agency.

In the second case, standard fees are applied -- some of them defined
through law ("statutory fees"), some through the agencies, which are in
theory clubs made up of their members : composers, arrangers, and
lyricists.  In the U.S., the copyrights are handled by the Harry Fox
Agency, whereas the performance rights are handled by ASCAP and BMI
(among others).

Ad a. -- Copyrights:

According to the law, there are two different sorts of "arrangements"
(this term is fortunately never used in the laws -- it is too unclear):

a1.  One can make a [law's expression] "phonorecord" which [law's text]
"does not change the basic melody or fundamental character of the
work".

a2.  One writes a new piece of music, which "only re-uses" the ideas of
the original.  This might be called an "arrangement in the narrow
sense"; or a "substantial arrangement".

Although the "does not change ..." clause creates a grey area, at least
the following is, in my opinion, quite certain:

-- Piano-roll "arrangements" of e.g. orchestral pieces are in the first
category (allowing this was the root of the whole (original 1909)
copyright law).  Also re-orchestrating ("arranging for ...") a piece
falls into this category, as long as the changes are only those that
are *required* to make the piece playable by the selected instruments.

-- Parodies are in the second category.  But even merely writing a new
text is already in this category.  Usual "arrangements for big bands"
are also in this category, because big-band arrangers like to give a
piece a "different character"; and also usually change it quite heavily
-- including solos, new forms like canons, free variations and
fantasies etc.

It seems that medleys (or cutting-out [and re-assembling]) of pieces
also falls into category 1 -- but I have not found hard evidence for
this.

Please do not ask me on the grey areas (e.g. "Re-orchestration of an
instrumental piece for choir"; this would probably require adding
lyrics, so it will fall into the second category -- but what if the
choir only sings "mhm-mhm"?).  Fortunately, for our case of "arranging"
for mechanical instruments, the whole affair is astoundingly clear:

As long as I "arrange" the piece only to make it "playable" on a small
organ -- i.e., I just adapt it to the possibilities of the instrument,
without changing "the basic melody or fundamental character of the
work" (which is actually my whole intention!) -, we do not leave
category 1! Stated differently, what happens then is not "arranging =
re-writing the piece", but "merely" "recording the original piece,
albeit on a somewhat esoteric instrument".

The following fact is now crucial: For a "recording" in category 1,
you can get a "compulsory license" -- i.e., the rights holder is (under
certain conditions, which for us are always true -- more on this below)
*required* to give you a license that allows you to "record" the piece.
Here, "recording" means -- as explained above -- (a) adapt to your
instrument without changing "the basic melody or fundamental character
of the work" and then (b) make a technical "thing" that captures the
adapted sound -- e.g. an organ roller or roll!

Of course, as stated at the beginning, the rights holder is granted a
fee for this compulsory license.  The fee is amazingly low: Right now
it is 8 cents/piece or 1.55 cents/minute, whichever is higher.  For our
short pieces, it will always be the 8 cents (obviously, these amounts
suppose that you sell thousands of recordings ...).

The amount is only due for *sold* pieces (therefore there are rules how
you have to write down what you have sold each month; these records
can, in theory, be checked by Harry Fox or the rights holder).

Ed Gaida told me that he asked the Harry Fox Agency about this; they
answered him they would not accept checks below $35 -- he should send
a check if he has sold that many rolls.  That means that you can send
them money only after 437 sold recordings ...

The whole concept of "recording" the piece means that there is *no
copyright on the recorded piece itself* -- because it is assumed to be
the *same* piece (only with the minor variation of adapting it to
another instrument).

Consequence: If you punch a "category 1 arrangement" from me, you
*cannot* write on the rolls/rollers "copyright of arrangement: Harald
M. Mueller" or the like! (and if you punch it without my agreement,
I cannot sue you for violating my copyright, because there is none.
I would most probably have to sue you for some other sort of theft ;-)).

This is a theoretical disadvantage for me -- it means that I cannot
participate in fees collected by ASCAP etc. for performances of my
arrangements.  However, I'm quite sure that ASCAP will not get fees for
my arrangements anyway (why? ... well ...); therefore, I enter into
direct agreements with "publishers" = "recording enterprises" like
Charlie Moore, Ed Gaida etc.

However, there *is* a copyright on the recording itself, which is held
by the person who does the recording.  This copyright means that the
recording cannot be re-recorded (or sampled) by someone else without a
license.  The copyright on the recording is marked by (P) (or rather, a
P in a circle) - so your rolls and rollers should read (P) Charlie
Moore, (P) Ed Gaida etc.

One last item: When I (Harald M. Mueller) "arrange" a piece for
roller/roll organ (in the category 1 sense), but you (Charlie, Ed, ...)
produce the roller/roll, then *you* are responsible for

* acquiring the compulsory license
* recording what you sold
* sending money to Harry Fox

I do not have to do anything (I'm only part of your "recording
enterprise").

This completes the section on "phonorecords" = "arrangements which only
adapt a piece to a new instrument and then are placed on a roller/roll"
"arrangements which do not change "the basic melody or fundamental
character of the work"" = "Category 1 arrangements".

Here are a few additional pieces of information:

* When does the rights holder *not* have to grant "compulsory license"?
This is the case when the piece has not yet been recorded by anyone
except the rights holder.  In other words, the copyright holder has the
right to deny *everyone* the right to make a recording.  But if he
allows only *one* recording, he has to allow *all* (therefore the word
"compulsory license").

The *first* license granted is called the "mechanical license" (the
term dating from the piano-roll days ...).  As I arrange only pieces
that have been recorded at least by two different people (thereby
guaranteeing that one recording is *not* by the copyright holder), I
know for sure that you can get a compulsory license if you want to
punch my arrangements.

* What are the details of getting a compulsory license? First, you must
really acquire it from the rights holder; there is no "implicit
granting".

The text of the request apparently has to be a little tricky, but there
are a few forms on the Internet with the necessary "legalese".  I have
some URLs, but a Google search for "compulsory license music" will find
them.

* Should you get compulsory licenses? I think the trade-off is -- get
the license: Very simple (a fax to the copyright holder -- most
complex: Find out the copyright holder's fax number) -- do not get the
license = risk being sued -- but for amounts below $35 no-one will sue
-- so it is de-facto not necessary (my opinion!!) ...

* What about the 2nd category of "arrangements" -- i.e., where the
music is "substantially changed" (my words)?  If I want to do such an
arrangement, I need the explicit license of the copyright holder of the
original composition (or, more precisely, of the piece on which I want
to base my arrangement -- which could in turn be an arrangement).

There is *no compulsory license* for this type of arrangement -- the
copyright holder can decide individually whether he allows me to
"substantially arrange" his music, and what he requires me to pay for
this.  I have read a few postings in newsgroups about this; and found a
few forms which are intended to be used by music teachers if they want
to arrange pieces to be used in music teaching.  All these texts lead
me to the conclusion that this sort of license is mostly only granted --
for "big bucks" (a few 100 $$ and upwards); or - for free only to
teaching institutions (if at all).

Therefore, I do *not* plan to do such arrangements, except if I get
such a permission by a composer.  Anyway, as I said somewhere above,
in general my intention as arranger is exactly *not* to do "new
arrangements".

[Added later: In Germany, the law ("Urheberrecht", abbreviated UrhR) is
very similar to the U.S. law -- with one big difference: The law (from
1965) on compulsory licenses ["Zwangsrechte", par.60+61] explicitly
contains some text about what it considers *not* to be arrangements,
but only modifications for re-recording -- namely changing the key; or
changing the vocal register.

It appears that the German law, when in doubt, prefers to assign
creativity to a modification, thus requiring a license to be granted by
the composer (or equivalent copyright holder).  I assume that this
difference between the U.S. and Germany on when a compulsory license is
sufficient is caused by the different time when the laws were enacted:
In the U.S. in 1909, the piano-roll industry (probably -- I do not know
this) requested the compulsory license; and hopefully, the
interpretation of the law has not changed since then and can also be
extended to organ rolls and organ rollers.

In Germany in 1965, there was no roll-industry, so only the electronic
recording industry required a compulsory license -- but for electronic
recording of sounds, a much narrower definition of "re-recording the
same arrangement" is sufficient.  Therefore, alas, I will have to
acquire "arrangement licenses" from the copyright holders here in
Germany.

Ad b. -- Rights for public performance

Having the right to perform is only necessary for public performances;
the fee has to paid to the copyright holder directly or (much more
common) to ASCAP, BMI, etc. which will distribute it to the composers.

(For private performances, this right is acquired by paying for the
"phonorecord" (roll/roller, CD, ...), of which the 8 cents mentioned
above are paid to Harry Fox and from there to the composers etc.)
However, one important issue is that *all recordings placed on the
Internet do count as public performance*.  The general consensus among
the fee-collecting agencies (also European ones like GEMA) seems to be
that *each download counts as a separate performance*.  The agreements
are not yet legally stable (most probably because not enough lawsuits
have been fought over them), but it seems that the following is
accepted:

* It is possible to count the number of downloads by checking the log
files of web servers; courts will allow the agencies to scan the log
files.  Thus, the exact number of downloads can be computed.

* The amount per download is on the order of 10 cents or so; but as the
web site owner usually does not limit the number of downloads
technically, he has no way of limiting his potential fee.  For a few
10000s downloads (which can easily happen if pieces are advertised in
certain newsgroups), this would amount to 1000s of $$.

* Even if the number is much smaller, the "experimental agreement" for
example of ASCAP has a minimum fee of $264 *per piece* (if I understand
it correctly).

My consequence is that I will immediately withdraw all recordings of
copyrighted pieces from my web site (essentially all pieces composed
after 1923).

So much for my insights and explanations in the U.S. music copyright
law.  I will try to find out more on German and European music
copyright law (because I live in Germany) in the next time.

Ad B) Resources -- text snippets from the Internet that explain U.S.
copyright issues

-- http://www.alanbergman.com/articles.html

The U.S. copyright law provides what is known as a compulsory license
which means that once a composition is recorded for the first time,
anyone else has the right to record that composition provided the
copyright owner (usually the publisher) is paid a statutory royalty
which for record sales is currently 7.1 cents per composition of five
minutes or less in length and 1.35 cents per minute for a longer
composition.  Because of the existence of the compulsory license, Fox
cannot deny the use of its music for streaming or downloads.  The only
issue is the royalty payable and that is determined by a Tribunal setup
under the Law.

-- http://copyclear.com/mechcomp.shtml

Recognize that copyright is actually a property right, and that
copyright owners should be paid for the use of their property.

Allow any person to obtain a license to make and distribute
phonorecords of any song once that song has been recorded and
distributed to the public in the United States under the authority of
the copyright owner.  NOTE: The purpose for making phonorecords must be
to distribute them to the public for private use.

Require that a "notice of intention" be served on the copyright owner
"before or within thirty days" and "before distributing" such
phonorecords Require that a fee (called a statutory fee, or a
mechanical license fee) be paid to the copyright owner for every
phonorecord made and distributed.  As of January 1, 2002, that fee is 8
cents per song recorded if the song is five minutes or less in length,
or 1.55 cents per minute for each recorded song that is longer than
five minutes.

Allow a licensee to distribute or authorize distribution of
phonorecords by sale, rental, lease, or lending...but require that
statutory fees be paid for each of those distributions.

Specify that a phonorecord has been distributed "if the person
exercising the compulsory license has voluntarily and permanently
parted with its (the phonorecord) possession."

-- http://www.concentric.net/~Outlawyr/zoetrope/cover.html

Cover Song and Compulsory License FAQ

Last updated October 21, 1999 by Mark Weissburg <mailto:cover@folkhop.com>

Disclaimer: The following is for informational purposes only and is not
legal advice.  Contact an attorney for help with specific legal
questions

Is it legal to do a "cover" -- a new version of another artist's song -
without permission? Yes, if you obtain a compulsory license.  As the
name implies, the artist or copyright holder has no choice, they must
issue a compulsory license as long as you comply with some simple
requirements.

Notice:

The first step is to give the copyright holder notice that you intend
to obtain a compulsory license.  If you aren't sure who holds the
copyright, check the name of the record company or publisher on the CD
or record.  You can also do a search of the records at the copyright
office on the Internet at <http://www.loc.gov/copyright/rb.html>.
Frequently, the copyright holder is one of the big 5 mega-media
companies, so this step can be easier than it sounds.  If you really
can't figure out who the copyright holder is, you may want to contact
The Harry Fox Agency at <http://www.nmpa.org/hfa.html> and have them
handle obtaining the compulsory license for you.  The disadvantage to
this is that Harry Fox will charge you a minimum fee based on 500 units
sold, regardless of whether you sell any CDs at all.  If you deal
directly with the copyright holder, you don't pay a penny until after
you sell a CD.

While I'm on the topic of money, you're probably wondering how much
this compulsory license costs.  In the most common scenario, where you
have one cover song on your CD, you will have to pay 7.1 cents per CD
sold if the song is 5 minutes or under.  Songs over 5 minutes cost
slightly more, based on a rate of 1.35 cents per minute [Remark: The
amounts are now 8 cents and 1.55 cents -- Harald M. Mueller].  As you
can see, the fee is minimal.  In addition, you can negotiate an even
lower royalty with the copyright holder, say if you're doing a charity
CD and they want some free publicity.  The compulsory rate is only the
most they can charge you.  Also bear in mind that these rates go up a
little every year at the beginning of the year.

To quickly review then, it costs very little to get a compulsory
license, and the first requirement is that you send the copyright
holder notice of your use of their song.  What does this notice look
like?  Unfortunately, the copyright office does not provide a form, so
you'll have to make your own.

Take a look at the form Harry Fox uses to get started
(<http://www.nmpa.org/hfa/m-license.pdf>).  Here are the basic notice
requirements: Before distributing your version of the song, you must
serve a Notice of Intention to Obtain a Compulsory License on the
copyright holder by certified or registered mail Make sure the notice
is titled "Notice of Intention to Obtain a Compulsory License" Include
your name, address and other contact information Put the title of the
song you are going to cover, and the original artist if known Put the
length of your version of the song (so they know how much the license
fee will be) If known, put the catalog number of your "phonorecord' and
the format you will issue it in (e.g. CD, tape, record, 8-track, wax
cylinder, etc.) It's easier than it sounds, especially after you've
done it once and have the form.  After giving notice, you can start
selling your CD.

Statement of Account

In any month that you sell the CD, you must make a Monthly Statement of
Account and include your royalty payment.  This statement is due on the
20th of the month following the month the sales were made.  Once a year
you also have to make a detailed Annual Statement of Account, and this
must be certified by a Certified Public Accountant.  Make friends with
a CPA now to avoid the expense of this later.  These accounting
statements have additional nit-picky requirements, and you should call
the copyright office and have them send you Circular 96 which explains
the ugly details.  Tell the copyright office that you want all their
information and forms related to compulsory licenses for music, and
they will send you a nice fat envelope.

The number is (202) 707-8150.  Why they don't have a toll free number
is anyone's guess.  They do, however, tend to be very efficient and
friendly, so I guess it's worth the five cents.

And now on to the Frequently Asked Questions:

Q: Does a compulsory license give me permission to sample the original
song?

A: No, you need to negotiate a license with the copyright holder to
sample their work, and this is frequently very expensive.  The
compulsory license is only for you to do your own original version of
the song, not to sample someone else's version.

Q: How different can my version be.  Can I do a punk version of that
one Barry Manilow song?

A: This is a gray area, but the basic rule is that you can do a musical
arrangement of the work "to the extent necessary to conform it to the
style or manner of interpretation of the performance involved." What
that means is anybody's guess.  You cannot "change the basic melody or
fundamental character of the work." Like I said, this is a gray area.
My guess is that, yes, you can do that punk version of your favorite
Barry Manilow song, as long as the basic melody is in there somewhere.
You can't change the lyrics, however, so if you think you're the next
Weird Al, you need to read up on "fair use," a very complicated
copyright topic outside the scope of this FAQ.

Q: Can I use my cover version in a movie, or as background music for a
CD-ROM?

A: No, you need a synch license to do this.  The compulsory license is
only for distribution to the public of "phonorecords" for private use.

Q: You keep using the word "phonorecord", have you lost your mind?

A: Nope, that's what the copyright office uses as an all encompassing
term that includes records, CDs, tapes, etc.  The copyright office web
site <http://lcweb.loc.gov/copyright/> defines it as follows: "A
phonorecord is the physical object in which works of authorship are
embodied.  The word "phonorecord" includes cassette tapes, CDs, LPs,
45 rpm disks, as well as other formats."

Q: Don't I have to file anything with the copyright office?

A: Amazingly, no.  Except in the rare case where you cannot identify
the copyright holder, there is nothing you need to file with the
copyright office to get a compulsory license.

Q: You are confusing me.  Where can I get more information from someone
else who makes sense.

A: Try the links below.  The copyright office has an exceptional web
site, and your hours spent reading there will be time well spent.  You
should also check out the discussion board at MP3.com called "Ask the
Music Lawyer" (link located at <http://www.mp3.com/community>).

Conclusion:

The compulsory license is cheap but a little complicated when it comes
to all the paper work.  If you have additional specific questions, you
should call the copyright office or try the MP3.com bulletin board,
linked immediately above.  Don't let the paper work daunt you, the idea
behind the compulsory license is to encourage artists like you to help
music evolve and flourish by creating new versions of old works.  Let
those creative juices flow.

Links:

  U.S. Copyright Office <http://lcweb.loc.gov/copyright/>
  Copyright records search <http://www.loc.gov/copyright/rb.html>
  Form 73 -- Compulsory License For Making and Distributing Phonorecords
  <http://lcweb.loc.gov/copyright/circs/circ73.pdf>
  Harry Fox Agency <http://www.nmpa.org/hfa.html>

-- http://www.djzone.net/pg/0101/ka01002.shtml

Songwriter -- the very lifeblood of the music business and one of the
most lucrative aspects of the music industry.  Writing one song that
becomes a standard (Willie Nelson's "Crazy") would set you financially
for life if you did not sign your rights away (like the Beatles or any
group of the Sixties).  The songwriter needs the publisher for several
reasons.  They hope the publisher collects, distributes and administers
all royalties to him from: live performances of the writers song(s),
radio airplay of his song, jukebox collections, sale of albums via an
artist, TV rights, commercial rights (Nike, Coke, Reebok) derivative
works (parodies, Muzak and other variations) and now Karaoke licenses

[...]

Mechanical Rights -- a license fee -- a flat fee called the Statutory
Rate set by the Copyright Royal Tribunal (US Government) that sets the
rate (currently at .075 per song per copy) for every time a song is
"mechanically fixed" in a medium ( i.e. CD, CD+G, records, cassettes,
video tapes etc.).

The main clearing house for mechanical licenses is the Harry Fox Agency
in New York City.  Harry Fox is not a living person.

Compulsory License- If a publisher does not wish to "participate" in
the licensing of the song, you can record their tune and "force" them
to take the money by filing for a Compulsory License.  With this type
of license you must report accounting once a month as opposed to
quarterly with Harry Fox .

-- http://www.thefirm.com/articles/mechroyl.html

A "Compulsory" license is a mandatory mechanical license that is issued
on behalf of the copyright owners after the public release of the first
recording of that musical composition.  Once a song has been recorded
and released to the public with the consent of the copyright owners,
any other party may "cover" or re-record the same musical composition
by obtaining a compulsory mechanical license.  These licenses are
routinely issued.

Nonetheless, a new recording may not change the basic melody or
fundamental character of the composition.  If changes are made, the
"new" version would be considered a "derivative work" and as such would
require the music publisher's approval which is within their sole
discretion.

A compulsory mechanical license, and the computation of royalties
derived from the license, are based upon a rate that is set by law and
known as the "statutory rate".  From time to time, the statutory rate,
is increased to reflect changes in the economy with its eyes on the
Consumer Price Index.

The U.S. statutory rate, effective as of January 1, 2002, through 2003
is 8 cents ($.08) per track, up to five minutes or a part thereof
(counting as sixth minute) per disc (or tape) made, or 1.55 cents
($.0155) per minute of playing time or fraction thereof, whichever is
higher.

-- http://www.promusicforum.com/articles/copyrights.html

The form of a copyright notice is simple -- for written copies of
songs, it should contain the copyright symbol (c) (or the text
"Copyright" or "Copr."), the year of first publication, and the name
of the copyright owner (see the bottom of this page for an example).
For a recording, use the same form but with the letter P in a circle
rather than a C (unfortunately, HTML does not support this character,
so I can't show it to you here).

Regards
Harald M. Mueller
Grafing b. Muenchen
Germany