How a Compulsory License Pays Songwriters, and What Phonorecords V Covers for 2028 to 2032

A recording artist can release a version of a song that has already been distributed to the public without first negotiating with the songwriter. Federal copyright law allows this through a compulsory license, provided the artist follows the statute and pays the set rate. The money then moves through notices, monthly payments and federal rate proceedings.

Three parts of the system shape how songwriters are paid. Congress wrote the license into Section 115 of the Copyright Act. A federal panel, the Copyright Royalty Board, sets rates when the parties do not agree. The Mechanical Licensing Collective collects mechanical royalties from digital services and holds money for works it cannot yet match to an owner. The rate proceeding for 2028 to 2032 is still open.

What the Compulsory License Allows

Section 115 gives any person who complies with the section a compulsory license to make and distribute phonorecords of a nondramatic musical work. The license covers digital deliveries as well as physical copies, according to the statute text published by Cornell Law School.

The statute sets several conditions. The primary purpose of making the recordings must be distribution to the public for private use. Another condition, which the statute lists as one alternative, is that phonorecords of the work have already been distributed to the public in the United States under the copyright owner’s authority. A work that has not yet been released does not qualify under that condition.

Copying another person’s sound recording carries its own test. The recording must have been fixed lawfully, and the owner of that recording must have authorized the copying (recordings fixed before February 15, 1972 follow a different authorization rule).

The 2026 Statutory Rate
Digital Music News reports the 2026 statutory mechanical rate at 13.1 cents per work, or 2.52 cents per minute of playing time, whichever is larger.

Notices, Monthly Payments and the 30-Day Cure

For phonorecords other than digital deliveries, a person who wants the license must serve a notice of intention on the copyright owner before, or not later than 30 calendar days after, making the phonorecords, and before distributing them. If the Copyright Office records do not identify the owner and include an address for notice, filing the notice with the Copyright Office is enough.

Digital deliveries follow a separate notice rule. Before the license availability date, notice must be served before the first delivery or within 30 days after it. On or after that date, the blanket license procedure in the statute applies instead. The statute says failing to give required notice can foreclose the license.

Royalties are due by the 20th day of each month, covering the previous month, except where the statute provides otherwise, such as the 45-day reporting period for blanket licenses for digital uses. Each monthly payment must be made under oath, and annual cumulative statements certified by a certified public accountant are also required. If the copyright owner does not receive a payment or statement when due, it may give written notice of default. For licenses other than blanket licenses, the license ends automatically unless the default is remedied within 30 days after the notice is sent.

Why Rates Differ by Format

Rates are set by negotiation or, if the parties do not agree, by the Copyright Royalty Judges under chapter 8 of the statute. The statute says those judges must establish rates that most clearly represent what a willing buyer and a willing seller would negotiate in the marketplace. Voluntary agreements take precedence over the judges’ determinations.

For physical formats and permanent downloads, the rate is set per work. Digital Music News reports the 2026 statutory rate at 13.1 cents per work, or 2.52 cents per minute of playing time, whichever is larger. The same outlet reports that the current rates rise with annual inflation adjustments.

Streaming works differently. Music Business Worldwide reports a headline streaming rate of 15.3% in 2026, rising to 15.35% in 2027, under the Phonorecords IV rates. Those headline rates are a share of service revenue.

Physical and download rates are set in cents, while streaming headline rates are a share of what services earn.

What Phonorecords V Proposes for 2028 Through 2032

Digital Music News reports that a proposed settlement covers stateside rates for physical formats and permanent downloads. The settlement keeps the Phonorecords IV rates in place, apart from annual inflation adjustments. The parties it names include the major labels, the National Music Publishers’ Association, the Nashville Songwriters Association International, the Music Artists Coalition and A2IM. The Songwriters Guild of America and several others did not join, according to the same report.

Streaming is still contested. Music Business Worldwide reports that the streaming services’ rate proposals were filed on October 5, 2026. Spotify, Apple, Google and Pandora each propose keeping the 15.35% headline rate. Amazon proposes 13.4% for non-bundle services. The National Music Publishers’ Association and the Nashville Songwriters Association International propose 20% of service revenue, with alternative measures that apply the greatest of several figures, including $2.40 per subscriber per month and $0.004 per play.

Music Business Worldwide also reports the revised schedule the Copyright Royalty Board issued on October 2, 2026. Amended written direct statements may be filed until December 21, 2026. Responses are due by February 1, 2027, and a settlement window runs from January 25 to February 15, 2027. Unless the parties settle, the hearing is set for March 22 to April 15, 2027, and the judges’ initial decision is due by December 17, 2027.

Where Unmatched Streaming Royalties Go

The Mechanical Licensing Collective’s news page reprints a 2021 Billboard report on how it handles royalties it cannot match to an owner. The collective must first try to match those royalties to their rightful owners. Its claim portal is meant to let rights owners search for unmatched songs and claim the ones they own, and the collective is also responsible for collecting ownership information and keeping a database of it.

The same page reports that about $424.3 million in unmatched royalties from before the collective launched on January 1, 2021, was turned over to it for distribution. Under the Music Modernization Act, the minimum wait before the collective can distribute unmatched royalties by market share is three years. The Copyright Office’s regulations and best practices, as the page reports them, say the first distribution should not occur for at least five years.

The page also says that clock should not start until the claim portal is up and fully functioning. At the time of the 2021 report, the collective had only a beta version of the portal. Even after five years, the collective should apply relevant criteria before deciding whether to defer the first distribution further.