A license for use of copyrighted material that is mandated by law to be made available to everyone on an equal basis, usually in exchange for the payment of a set fee.
From the user’s perspective, it is a use for which the user does not need to seek permission. That is, the rights-holder may not refuse to grant the license to the user. The rights-holder still has the right to whatever revenue comes from the use, but has no rights of control.
Such licenses are always non-exclusive, since anyone can obtain one, and the fees that are paid to the rights-holder for them are usually set by statute. An example of a compulsory license is the so-called “mechanical license” under U.S. law for recording a new version of an existing song. Once a song has been released to the public, any other artist may record a version of it, and must pay a set fee (currently 2.5 cents per copy) to the rights-holder of that song.
This is not the only example of a compulsory license. There is a wide variety, whose nature and terms depend on the laws of the country in question, and the nature of the work. Compulsory licensing schemes exist for music, text, pharmaceuticals and more.
Recently, some copyright scholars and activists have proposed that the solution to the perceived problem of peer-to-peer filesharing will be some sort of compulsory licensing scheme. Filesharing would become legal, but artists would get paid, most likely out of a fund created by levying taxes on recordable media and associated technologies.