Permission To Make A Digital Download (DPD)
You will need to secure a DPD license if you are creating digital downloads that include copyrighted songs. A DPD license allows the licensee to reproduce and make an audio recording of a copyrighted song and distribute it. This license covers a specific song (music and lyrics), not any recordings of it. The DPD license royalties go to the song's owners, usually the songwriter and/or their publisher. DPD royalties are "compulsory" which mean that publishers are required by law to grant them, if the song has previously been recorded at least once. Mechanical royalties rates are set by Congress and are currently 9.1 cents per song per download for 5:00 and under.
If you want to make a digital download of someone else's recording of a song, you will need to secure a master recording license in addition to a mechanical license. A master recording license allows the licensee to use a pre-existing recording in their project. This license covers the recording of the song, not the actual composition itself. The royalties from a master recording license go to the recording's owner, usually the performing artist or their record label. You need to get a master recording license if your project will use a preexisting recording owned by someone else. Publishers are under no obligation to issue master recording licenses and they have complete discretion to deny a request. Master recording license royalties vary, but you should budget for 25 to 30 cents per song per copy.