The purpose of this thread is to give people a clear idea of how OCR operates, how revenue is generated (and where that revenue goes), and the relationship between OCR, its operations, and the people that contribute to it.
Is content on OCR licensed?
No. We do not license the ReMixes distributed on our site (and through channels like YouTube). (There is one exception, which is described below.)
Why aren't the remixes licensed?
It's simply impossible to do this for several reasons.
1. Mechanical licensing via the compulsory licensing permission (the one that does not require publisher permission) requires that the source material be published commercially in the United States prior to licensing. Many remixes on the site are of source material never released in soundtrack form in the US, therefore they cannot be licensed.
2. Even if the music could be licensed, since OCR is founded on the concept of distributing music for free, it would be impossible to support the massive licensing costs necessary for all remixes on the site. To use some napkin math: assume 3400 remixes are each downloaded 100 times per month, which is a gross under-estimate. At 9.1 cents per copy downloaded, this would require licensing fees of over $30,000 a month - for downloads alone.
3. No established license mechanism could cover free downloads of MP3s and ad-supported streaming. Compulsory mechanical licensing only covers downloadable copies; as a result, custom licensing agreements would need to be made with every publisher (which they could simply reject, unlike a compulsory license.)
For total emphasis, there is no conceivable way that the content on OCR could be licensed, and especially not while remaining compatible with the site goal of distributing free music.
Does that mean OCR is illegal or infringing copyright?
By default, any use of copyrighted material without express permission of the copyright holder is considered infringement. However, US copyright law makes provisions for "fair use" of copyrighted material as a defense to infringement in a court of law. Fair use is the legal principle that allows for things like educational usage, commentary, parody, and satire, among other uses. While fair use cannot be established except in a court of law, and there are no strict guidelines allowing anyone to decide whether a use is fair or not outside of the court system, it's possible to make an educated guess as to whether a use is fair or not.
This educated guess is based on an evaluation of the factors evaluated for determining fair use, and precedent. The biggest of these factors are whether a work is transformative, and whether it is 'commercial'. These are both loose and nebulous terms, but that being said, our strongly-held belief (reinforced by the belief of consulted legal counsel) is that OCR's distribution of fan-created arrangements for non-commercial educational purposes is fair use. This has been discussed at length in other posts but suffice it to say that when analyzing all these factors, we've made a very strong case for this if a court case were ever to happen.
Isn't it worse to upload music to YouTube, especially if it's monetized?
No. If fair use applies to OCR's activities, it would certainly extend to YouTube. If it doesn't apply, then the site's current activities (on and off YouTube) would be considered infringement, in which case it's a moot point.
YouTube is actually a better place to address issues of infringement than elsewhere, because Google provides content creators with several tools: the ability to claim a video (which grants the publisher/claimaint all further revenue from the video) or issue a takedown. Both of these would not entangle either party in the court system, as Google/YouTube mediates any disputes, avoiding a costly legal battle. In short, we'd much rather defend ourselves to YouTube, ON YouTube, with the assistance of YouTube specialists who have extensive experience in copyright disputes.
Also, keep in mind that on YouTube (and off), a creator can claim infringement regardless of whether someone is generating revenue from a work or not. My own personal experience with YouTube claims and takedowns has exclusively been with un-monetized videos. In short, if a publisher took issue with OCR, not running YouTube ads would not protect us in any way.
Does OCR generate revenue from its content?
Yes. Since the early 2000s, ocremix.org has run ads throughout the site. Other revenue is generated from sales of OCR merchandise (not music; music on the site is not sold commercially) such as t-shirts and hoodies. Within the last few years, OCR launched a Patreon page which also generates revenue. Ads were also enabled on <1% of videos on OCR's YouTube channel from June-August 2016 for testing purposes, which has also generated a small amount of revenue. Until OCR officially becomes a registered non-profit organization, and YouTube ads are discussed further with the community, YouTube ads will only be served on the videos of ReMixers who have given OCR their explicit permission.
Why does OCR need to generate revenue?
OCR as a website has technical costs, such as the cost of a dedicated server, mirrors, and bandwidth. These expenses are necessary for the basic operation of the site. Revenue is also needed to create promotional materials for the site: that includes merchandise like t-shirts and hoodies, as well as strictly-promotional physical copies of album projects. (These promotional physical albums are not sold, and the content on them is available for free on ocremix.org. They are given away at conventions). OCR has also been attending conventions such as Otakon, MAGFest, and PAX (among any others) to evangelize video game music, promote recent album releases, and give away free stuff. Expenses directly related to OCR panels at these conventions (such as technical equipment needed for panels) are sometimes covered by OCR as an organization.
There are also many plans for the organization that require revenue to achieve. For example, the OCR YouTube video template has not been updated in many years and looks dated. We're in the process of commissioning custom visualization software to produce better-looking videos strictly for the enjoyment of viewers and fans. Also, we're looking to obtain true non-profit organization status, which we believe will take a substantial amount of money to file and maintain properly.
Where does surplus revenue go?
For a long time, there was no surplus revenue. Expenses were often paid out of pocket by Dave and other staff. Now that revenue is exceeding expenses, the revenue... isn't going anywhere. It's staying in OCR's accounts until it is used for purposes like those described above. The aforementioned non-profit filing process will likely take most if not all saved money.
So is OCR a non-profit organization?
From our submission agreement: OCR legally cannot distribute submitted materials for for-profit endeavors. Furthermore, OCR is legally bound to spend any revenue on costs directly associated with operation and promotion of OverClocked ReMix.
However, OCR as an entity does not have true non-profit status - 501(c)(3) - which is why achieving that official status is a major goal.
Are any ReMixers or site staff paid for their work?
No. Nobody has been paid for their work contributing to the site either as a remixer, staff member, or administrator, djp included.
(Fine print: OCR has released one commercial album, For Everlasting Peace: 25 Years of Mega Man, as an officially licensed release in partnership with Capcom, with Capcom retaining ownership of the music. ReMixers were paid for this release, which was licensed directly with the publisher. This music is not available on the site and was not submitted through the normal channels, so it's an outlier.)
Will ReMixers ever be paid?
Not for regular submissions to the site, which are distributed for free. Not only would the logistical overhead be unmanageable, but it would invalidate our fair use case, as it would be impossible to justify those payments as necessary to the direct operation of the site as a non-profit entity. However, we'll continue to explore separate licensed projects like MM25, or officially licensed commercial albums through our sister site OverClocked Records. We view these as separate from the core work that OCR does: distributing and evangelizing free music.
Will site staff ever be paid?
There is absolutely no plan to do this, nor has it been seriously discussed among site staff in all years of operation. It's conceivable that it could happen someday, after 501(c)(3) status is achieved and we're complying with all regulations for transparency, corporate bylaws, etc. djpretzel wants there to be a plan for the site should anything ever happen to him, and operating a 501(c)(3) will require more administrative duties for things like bookkeeping and accounting. Again, if it were to ever happen, it would be executed properly to the letter as per federal guidelines for non-profit organizations and in full compliance with our own legally binding submission agreement.
Is there anything to prevent revenue from being distributed as profit to staff now?!
Of course. Just because OCR is not a 501(c)(3) yet does not mean our submission agreement isn't legally binding: it is. And that agreement, which applies to OCR as an organization, strictly limits how revenue can be used. Again, site staff have never been paid nor are there any plans to do so.