If you are selling a cover song but happen to know the songwriter personally there is often no need, and usually no means of securing a mechanical license. It is best though, even if it's a simple agreement among friends, to get something in writing for your own personal records (ie. an email, written/signed letter).
In this situation when you are completing the submission on CD Baby you should do the following when asked about your cover song license:
Standard Singles Submissions
- Under composition type, click COVER SONG
- Indicate YES when asked if you have secured a license
- Choose LICENSING AGENCY from the drop-down
- Add "Private Agreement" in the License #/ID section
- Under composition type click COVER SONG