The mechanism
Because no part of the original master is used, an interpolation requires clearance only on the composition side. That removes one of the two counterparties needed for a sample, and it removes the label from the negotiation entirely. The trade is that the publishers still hold a veto and typically take a share of the new work's publishing.
A worked example
What it is confused with
- Sampling A sample uses the original RECORDING and therefore needs clearance from both the master owner and the publishers. An interpolation re-records the part and needs only the publishers.
- Cover version A cover reproduces an existing song as a whole and is generally available under a compulsory mechanical licence. An interpolation places part of one work inside a new one and is not compulsory: it can be refused.
Why it matters
It is the standard route around an unclearable or unaffordable master, and it is also the most common reason a modern credits list contains writers who were not in the room.
Sources: US Copyright Office
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Related: Recoupment · Black box royalties · 360 deal