Mechanical royalties are one of the most important revenue streams for songwriters and composers, yet they remain widely misunderstood. In this comprehensive guide, we'll break down what mechanical royalties are, how they're generated, and why every musician should be tracking them.
What Are Mechanical Royalties?
Mechanical royalties are payments made to songwriters and publishers when their compositions are reproduced in any format. This includes:
- Physical formats (CDs, vinyl, cassettes)
- Digital downloads
- Streaming platforms
- Interactive streaming services
The term "mechanical" dates back to the early 20th century when songs were reproduced through mechanical means like piano rolls and phonograph records. Despite technological advances, the name has stuck.
How Mechanical Royalties Are Generated
Every time your composition is reproduced, you're owed a mechanical royalty. Here's how these royalties are generated across different formats:
Physical Sales
For CDs, vinyl records, and other physical formats sold in the US, the current mechanical royalty rate is 9.1 cents per song under 5 minutes. This is split between all songwriters on the track according to their agreed percentages.
Digital Downloads
Similar to physical sales, digital downloads (like those on iTunes) generate a mechanical royalty of 9.1 cents per download for songs under 5 minutes.
Streaming
Streaming services like Spotify, Apple Music, and YouTube Music pay mechanical royalties based on a complex formula that factors in:
- Total service revenue
- Number of subscribers
- Total streams across the platform
- Your percentage of those streams
The resulting per-stream rate is typically a fraction of a cent, but can add up significantly with volume.
Why Mechanical Royalties Matter
Many artists focus exclusively on performance royalties (those collected by PROs like ASCAP, BMI, and SESAC), overlooking mechanical royalties entirely. This is a costly mistake for several reasons:
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Streaming Dominance: As streaming becomes the primary way people consume music, mechanical royalties from these platforms are increasingly important.
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Global Revenue: Mechanical royalties are generated worldwide, creating a global revenue stream.
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Long-Term Income: These royalties continue generating income for the full copyright term (life of the author plus 70 years in most countries).
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Unclaimed Royalties: Millions in mechanical royalties go unclaimed each year because rights holders haven't properly registered their works.
How to Collect Your Mechanical Royalties
To ensure you're collecting all your mechanical royalties:
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Register with a Mechanical Rights Organization: In the US, the Mechanical Licensing Collective (MLC) is now responsible for collecting and distributing mechanical royalties from digital services.
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Work with a Publishing Administrator: Companies like WAYU Publishing can handle the registration and collection process for you, ensuring you don't miss any revenue.
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Register Your Songs Properly: Make sure all your songs are registered with complete and accurate information, including correct splits between co-writers.
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Monitor Your Catalog: Regularly check that new releases are properly registered and generating the royalties you're owed.
Common Misconceptions About Mechanical Royalties
Let's clear up some common confusion:
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Myth: "My distributor collects all my royalties for me." Reality: Most distributors only collect your sound recording royalties (master royalties), not your composition/mechanical royalties.
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Myth: "I don't need a publisher to collect mechanical royalties." Reality: While technically true, the process of registering and collecting from multiple sources worldwide is extremely complex and time-consuming.
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Myth: "Mechanical royalties are only for major artists." Reality: Any songwriter whose music is reproduced is entitled to mechanical royalties, regardless of popularity.
The Future of Mechanical Royalties
The music industry continues to evolve, and with it, the landscape for mechanical royalties. Key developments to watch include:
- The MLC's efforts to distribute previously unclaimed royalties
- Emerging platforms like TikTok and how they'll handle mechanical licensing
- International standardization of mechanical royalty collection
- Blockchain and other technologies that may streamline royalty tracking and payment
Conclusion
Mechanical royalties represent a significant and often overlooked revenue stream for songwriters and composers. By understanding how they work and taking proactive steps to collect them, you can ensure you're receiving all the compensation you're entitled to for your creative work.
If you have questions about your specific situation or need help collecting your mechanical royalties, WAYU Publishing is here to help. Our team of experts can guide you through the process and ensure you're maximizing your royalty income.