This whole story is hilarious!! :) Thanks for posting. I'll be in a jolly mood for hours! :) :)
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Another related question: I seem to recall an old interview where Loretta Lynn said someone asked her permission to record one of her songs and she refused. (I can't remember the reason.) Can the songwriter actually refuse permission?
If so, a lot of people/bands are in trouble.
My understanding is if the song is listed with a Pro company, it's available for live use with compensation. Similarly with HF for recording covers with compensation. If it's not listed, it's either in the public domain or it requires direct permission from the owner of the property. The person asking for permission in this case may have been asking for a song that was not yet listed with the Pros or with HF...
Btw, the public domain is growing again. We're up to 1927 this year.