The question of when something is a derivative work should not be complicated, although some have made it so. Let's start with the statutory definition, in Section 101:
A “derivative work” is a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications, which, as a whole, represent an original work of authorship, is a “derivative work.”
Note that a sound recording is a derivative work. This doesn't mean only a revision to an earlier sound recording (although that too is a derivative work), it also means the original sound recording. That's because the sound recording is deemed to be based on the musical composition whose performance is embodied in the sound recording (and phonorecord when fixed).
The question of derivative sound recordings has arisen in connection with the Section 115 compulsory license. That license is available when "phonorecords of a nondramatic musical work" are distributed. There are presently a number of different formats of Super Audio in the market place, including SACD and DVD. (The most recent platform, DualDisc, is not Super Audio but has, as its name indicates two layers, one audio and one audiovisual). There are older discs that will play only on an SACD player or only on a DVD player, as well as "Hybrid" or DualDiscs that will play on an SACD or CD player or a universal player. (I have the last of these types of players).
Issues for compulsory licensing are presented because there is more than one layer on a single Super Audio disc. Two principal questions are: (1) whether some of these layers are merely "transfers" that do not represent new authorship, or, whether some, such as remixes for 5.1 channel surround sound, are derivative works for which a separate compulsory license fee is required unless (2) even though there are as many as three layers on a given disc (all perhaps with different derivative versions), the disc is considered to be one "phonorecord" within the meaning of Section 115, and thus one payment only is required notwithstanding that if the layers were separately released they would require three payments.
The issue was discussed at a U.S. House IP subcommittee hearing in March 2004. There was also a March 2005 hearing before the subcommittee on larger 115 issues.