Hi Chris,
First of all, a warning. This is an
extremely complicated area and I cannot possibly cover all the details here, so if you are in any doubt about your legal position, you should contact a good lawyer with experience of the music business. Do not use any old High Street solicitor because chances are they won't have the expertise to assist you. You will become a publisher and that has some serious responsibilities.
I assume you will have the permission of the artists and more importantly the producers to sell these CDs. As you are probably aware there are (generally) three separate sets of rights in a music cd: copyright in the song (writer/composer), the performance rights of the artist/band and the copyright in the recording (owned by the producer).
From what you say, it appears that 2 and 3 are not the problem, just whether the artist/band have the necessary licence to perform other people's songs.
This is where it starts to get complicated. There are two separate rights that a song writer/composer can license: the performing* right and the mechanical right. Performing right allows an artist to perform the song in public, and mechanical right allows a recording to be made. Both of these rights attract separate royalties which are collected by two separate
copyright collection societies, PRS and MCPS, although they now operate jointly as
PRSforMusic. You should spend a bit of time exploring their site.
If the artist/band has not got permission to use the songs, then that will be infringement and you would also be liable for secondary infringement as someone who is dealing in the work, unless the last bit below applies and you can prove it. :
23 Secondary infringement: possessing or dealing with infringing copy.
The copyright in a work is infringed by a person who, without the licence of the copyright owner—
(a) possesses in the course of a business,
(b) sells or lets for hire, or offers or exposes for sale or hire,
(c) in the course of a business exhibits in public or distributes, or
(d) distributes otherwise than in the course of a business to such an extent as to affect prejudicially the owner of the copyright,
an article which is, and which he knows or has reason to believe is, an infringing copy of the work.
If you have taken reasonable steps to satisfy yourself that there is no infringement of the writer or composer's copyright, then you should be able to claim this defence if it later transpires you were deceived. If there is to be a contract then, yes, they should state that not only do they have the necessary licences to perform and record the music, but also that they indemnify you against all claims for secondary infringement. Furthermore, if you are not dealing directly with the artist/band, make sure that the contract also covers the artist's performance rights. These performance rights cover several forms of exploitation including the basic agreement to allow the performance to be recorded, then for copies of the recording to be sold, lent or otherwise issued to the public, and following on from that, synchronisation ('sync') rights and 'grand' rights. The latter two concern the use of the recording on the radio, on television or in film or for dramatic performances such as stage shows or musicals etc. Again, if there is to be a contract make sure you are indemnified against any claim arising out of the producer's failure to secure these rights.
And when you sell these CDs you will be responsible for paying the royalties due from the sales back to the various beneficiaries, namely the composer/lyricist, the artist and the producer.
Good luck with your project.
* Note that 'performance' right and 'performing' right are two completely separate things. The former belongs to the performer(s) and the latter to the composer/lyricist.
