Do Cover Bands Have To Pay Royalties? A Complete Guide To Legally Make Covers

Cover bands have to pay royalties but it depends on where they are covering these songs. The royalties rely entirely on the context of the performance.

However, in order to learn more about royalties, one must first learn about Compulsory Licensing.

What Is Compulsory Licensing?

A law called "compulsory licensing" means cover bands and artists cannot be denied from covering a song.

This law means cover artists can cover a song without getting permission from the main artist. The cover band simply has to let the artist know that they are covering one of their songs.

As for the original artist, they get paid a set amount for the song.

According to syncsongwriter.com, the current going rate is 9.1 cents for music under 5 minutes, and 1.75 cents per minute if the song is more than five minutes long.

These rates apply for both physical releases and digital downloads.

So, following this licensing, a band or artist can either release or perform a cover song as a record, during a live performance or on a streaming platform like YouTube.

Each of these three avenues has its own various methods of protecting and providing profit to the original singer, songwriter, and label.

Performing a cover song on a record like an album, EP, or B Side is a time-honored pop tradition. Thus, it is also the clearest in copyright.

As stated above, back in the early days of pop music, it was common to cover songs to beef up an album, or simply not pay songwriters for songs that wouldn't be singles. However, these days, cover songs have earned a different form of utility.

These days many artists or bands use them to either showcase their musical prowess, as covering a respected song well shows that they have the technical skill and know-how. Artists also record cover songs as a great way to show off their versatility and dabble in a variety of different genres, or adapt aspects of those genres into their main genre.

Though these aspects are as encouraged in the modern pop landscape as they were back in the mid-century, now the original artists are protected by clear-cut copyright rules. Surprisingly, these rules benefit both the original artist and the cover artists, but in different ways.

Performing a cover song live is another time-honored tradition in pop music and is surprisingly easier than on record.

As with covering a song on the record, artists cover songs live in order to experiment, let loose, or pay tribute to a preceding artist. Sometimes, they do so to pay tribute to the place they are performing in, and by way of singing a song from an artist from that place, they honor the place.

However, just because a song is being covered in a live setting does not mean the original band or artist does not get a monetary return for their song being used. However, in this particular case, the headache of royalties and licensing is lifted from the head of the cover artist and placed on another entity's head: the concert venue.

A live venue must have licenses from various entities like the American Society of Composers, Authors, and Publishers (ASCAP) and Broadcast Music Inc. (BMI) beforehand for use of copyrighted tunes. In fact, the concert venue needs to obtain a blanket license so that they can ensure the legal status of all the songs that are being played in the venue.

This need for a blanket license not only applies to live settings like concerts, tours, or festivals but also to televised settings like talk shows and musical competitions. For example, if there are any cover bands or artists performing at the Tonight Show with Jimmy Fallon, then it is up to them to obtain a license from the relevant parties so that the artist can perform the song legally.

Covering a song on YouTube is currently the most popular way to release cover songs.

The main reason why is the fact that the cover band or artist does not need to get a sync license to release a cover of a song in a video. In fact, while it is possible for the original owners to charge fees for a YouTube covering their song and making a video out of it, the song would have had to make a lot more money than they usually do for them to consider taking any action legally.

This is one of the main reasons why many YouTubers have built a career out of recording and performing cover songs on YouTube. YouTube has blanket licensing deals with over 95% of publishers, so their users have the freedom to release whichever cover songs they want.

Sadly, this does not mean a cover artist or band can get rich off of releasing cover songs on YouTube. The main reason why publishers don't launch legal action is that they are already being paid a hefty sum in ad revenue that would have gone to the artist had they made original content.

This is primarily why many Youtubers who make cover songs either don't monetize their videos or eventually move to make original music.

A cover band or artist does not need permission to release a cover but they need licenses like Mechanical, streaming, and an ISRC Code.

Mechanical Licenses

Firstly, the Mechanical License is for when the cover band or artist releases the music for public consumption.

Due to the rise of the internet, it now mostly deals with online releases through the cover artist or band's website or platforms like Bandcamp. These licenses are handled by agencies Harry Fox Agency, or EasySongLicensing.com.

Musical artists looking to cover songs can work with an agency to obtain Mechanical Licenses. In order to do so, one needs to let the agency know how many physical copies they have pressed or download sales they expect to make.

For example, if a cover song of fewer than five minutes is expected to sell 1,000 units, that means the cover artist or band needs to pay $91.

Streaming Licenses

A streaming license is different from a mechanical license for in the latter people are purchasing the product.

In streaming, they are listening to the song through a third party. As such, artists and bands will need to work with other organizations to obtain streaming licenses.

The biggest companies that help with obtaining one are CD Baby, DistroKid, and Soundrop. These organizations help distribute cover songs to major streaming platforms, for a fee.

ISRC Code

An ISRC Code helps distinguish a particular cover song from other cover songs.

Since popular songs are bound to be covered by many artists, the ISRC song helps distinguish which cover song belongs to which artist. In essence, they work as a copyright of a cover song for a cover artist or band.

Sync License

Lastly, a sync license is required if a band or artist wants to release a music video of the cover song.

The problem with a Sync license compared to the ones previously mentioned is that it is a lot more involved than the others. In fact, in order to obtain this license, a cover band or artist needs to talk directly with the music publisher and/or composer.

Even then, far from a simple conversation, one needs to submit a formal request, which will lead to them quoting a licensing fee to use the song. While it is already a hard sell if the original owners will even let the cover band or artist make a video, even if they do, the fees can be insanely high.

This is one of the main reasons why while releasing cover sings on a record, or performing them live in concert or on television is common, releasing a music video for one is a much rarer feat.