A mechanical licence is the agreement by which permission to reproduce a musical work on a sound carrier is granted by the copyright owner or its representative. CMRRA issues mechanical licences through two basic plans: Pay-As-You-Press/Import, or pursuant to the terms of CMRRA’s standard Mechanical Licensing Agreement (MLA). If you only plan to produce or import a small quantity of product(s) then you may want to visit CMRRA’s Pay-As-You-Press / Import Licence page. If you plan to produce a large number of product(s) on an ongoing basis then you may wish to enter into an MLA with CMRRA.
Please contact CMRRA for more information if you are interested in entering into an MLA. We will be happy to discuss the standard MLA terms and conditions, as well as the prerequisites for eligibility. An MLA is not appropriate for everyone, as it is structured for businesses that manufacture, distribute, and sell records in Canada on an ongoing basis. Note that parties to an MLA are required to keep track of, and process, any change in the ownership of the musical works they have used, in order to produce accurate royalty statements each quarter. This capability, plus additional requirements, are assessed on a case-by-case basis when making a determination if a label qualifies for an MLA.
► How much does it cost to obtain a mechanical licence?
CMRRA currently issues mechanical licences on the basis of 8.3 cents per work, per copy manufactured, where the playing time is five minutes or less. For each additional minute (or part thereof) 1.66 cents is added to the rate. Note, however, that a small number of publishers represented by CMRRA do not participate in the industry agreement and charge a higher-than-standard royalty rate.
This royalty rate is applicable only to reproduction of musical works embodied in audio-only sound recordings, such as CDs, cassettes and vinyl recordings. The royalty rate for the reproduction of musical works embodied in any other merchandise, such as toys, games, or any other special product is subject to individual negotiation.
If you have entered into CMRRA’s standard MLA, you may be entitled to a discount on the royalty rate above for budget recordings and musical works subject to controlled composition clauses. Please refer to the provisions of the agreement or contact us for assistance in this regard.
► Can I pay royalties quarterly based on my sales?
Record labels who are licensed under CMRRA’s Mechanical Licensing Agreement (MLA) can report royalties to CMRRA on a quarterly basis as products are sold. However, parties to an MLA are required to keep track of, and process, any change in the ownership of the musical works they have used, in order to produce accurate royalty statements each quarter. This capability, plus additional requirements, are assessed on a case-by-case basis when making a determination if a label qualifies for an MLA.
► What is the Mechanical Licensing Agreement (MLA)?
The MLA is the standard agreement entered into between CMRRA and record labels doing business in Canada on an ongoing basis. It sets out the standard terms and conditions of mechanical licensing, including application for licenses, royalty rates, royalty reporting and payment requirements, reserve accounting, promotional copies, treatment of delete products and controlled composition clauses.
Licensees under the MLA pay their royalties on a quarterly basis as products are sold and are allowed credit for returns and promotional copies. However, administering the MLA requires a high level of accounting expertise and a significant investment in personnel and systems. To see if you meet the criteria for becoming an MLA Independent Licensee, please see "How can I become an MLA signatory?" below.
► How can I become an MLA signatory?
(a) Administrative Requirements: MLA companies must be able to produce error-free royalty statements in a standard electronic format. They must demonstrate that their royalty system can adequately track royalties owed as well as the handling of reserves, returns, free goods and promotional units. They must be able to deliver a quarterly report of undistributed royalties.
(b) Volume Requirements: MLA companies should be able to demonstrate that their use of CMRRA-represented works will account for a minimum amount of quarterly mechanical royalties. This may require them to provide CMRRA with information such as sales projections, release and work information, or business plans/models.