A Compulsory License is a clause in copyright law that allows the use of copyrighted materials without the explicit permission of the copyright owner. In exchange, a royalty is paid to the copyright holder.
In the music industry, a compulsory license refers to a mechanical license which, by law, must to be granted to anyone who chooses to digitally stream or record a composition (other than for the first use). The copyright owner is entitled to receive royalties in exchange for the compulsory license as their song is streamed or purchased.