Getting a royalty check is always a win. It means you successfully released music or contributed compositionally to a recording and that all your hard work paid off. It’s also likely not a one-off payment but part of a recurring revenue stream. That means future money whenever your music is played, reproduced, or streamed on a digital service like Spotify or Apple Music.
But releasing music is the easy part. Knowing when royalties are owed, who pays and collects them, and how splits work when there are multiple songwriters or rights holders – that can be tricky business. Many songwriters miss out on money owed to them simply because collecting it is too complex.
Mechanical royalties are one of many revenue streams available to artists. If you write or contribute to a musical composition – the original lyrics, melodies, or other components of a song – you may be eligible to collect mechanical royalty payments. Unlike performance royalties owed when your music is publicly performed, mechanical royalties are owed whenever a physical or digital copy of your music is made and distributed. Physical copies include vinyl, CDs, cassette tapes, and you are owed royalties whether or not copies are ever sold. As soon as a vinyl record is produced, a mechanical royalty is born. Digital copies – also known as digital distributions or interactive streams – refer to music distributed on an on-demand streaming platform.
You also have the right to collect mechanical royalties on any cover versions recorded and released by other artists. This is one reason why large corporations and private investment groups have been paying millions to own the catalogs of artists like Bob Dylan and Stevie Nicks. Just imagine how many times "Blowin' In The Wind" has been covered. That’s a lot of future royalty payments that new owner can collect.
Who collects and distributes mechanical royalties?
In the US, mechanical royalties are collected and distributed by the Harry Fox Agency and the Mechanical Licensing Collective (The MLC). If you anticipate collecting royalties internationally, you need to register with the appropriate collection society in each country. In territories outside the US, mechanical royalties can be collected by either the Performing Rights Organization (“PRO”) or its partner Collective Management Organization (“CMO”).
If that seems like a lot of work, it’s because it is. However, some companies do the heavy lifting for you. The easiest way to register with collection societies in multiple territories is to work with a publishing administrator. These companies work with collection societies worldwide and collect royalties owed to you.
Before we move on, we need to address a misconception about how mechanical royalties are collected. Many artists make the mistake of believing all performing rights organizations (PROs) like ASCAP, BMI, or SESAC collect and distribute mechanical royalties for them. These organizations are known as copyright collecting agencies; however, they do not always collect mechanical royalties. They generally only collect and distribute performance royalties. You can learn more about Performance Rights Organizations and how they can help you collect performance royalties here.
Do streaming services pay mechanical royalties?
The term ‘mechanical’ dates back to when music was sold primarily on physical music formats; piano rolls in the early twentieth century, then vinyl, cassette tapes, and CDs. But mechanical royalties also now apply to interactive streams and digital downloads. That means iTunes and other digital services such as Spotify, Apple Music, Tidal, Google Play, and Amazon, where listeners can choose the music they want to listen to.
However, not all digital platforms owe mechanical royalties. Non-interactive streaming platforms, where you can select a style of music but not a specific artist, song, or album to play, owe royalties under a blanket music license. Non-interactive streaming services include Pandora, SiriusXM, and Last.FM.
How much are mechanical royalty payments?
In the US, the US Copyright Act and Copyright Royalty Board set the mechanical royalty payment rates. Reevaluation of these rates occurs every five years. For CD, vinyl, cassette, and download sales, the royalty rate is 9.1 cents per reproduced copy (for tracks over 5 minutes in length, the rate is slightly higher).
Doing some quick math, if you make 1,000 physical copies or sell an equal number of downloads of your new single for $1 per unit, you are eligible to earn $91. However, you may not see all of that $91. First, your publisher might take a cut. Then you may have to split that money among multiple rights holders. You can learn more about songwriter splits or percentages here.
Streaming services pay mechanical royalties on a per-stream basis. Rates typically average $. 0005 per stream, depending on the streaming platform. Remember, this is the mechanical royalty fee, which is different from the common royalty payment Songtradr collects when someone streams your music. Most songwriters are familiar with this payment type, often called the master, artist, or distribution royalty – it typically ranges from $. 0030 to upwards of $. 0054 per stream, depending on the streaming platform. But platforms like Spotify do not pay mechanical royalties directly to independent artists. If you are not registered with the MLC or a publishing administrator, you could be leaving unclaimed money on the table.
Distribute and Monetize Your Music
Nick Fulton
Before joining Songtradr, Nick spent more than a decade writing reviews, essays, criticism, and interviewing artists for i-D, Billboard, Pitchfork, and other global publications. He's spoken to hundreds of emerging and established artists, including Lenny Kravitz, Michael Stipe, Khruangbin, St. Vincent, Incubus, and Eartheater.
What is the fate of artiste in Nigeria ( west Africa) joining songtradr. As in is it possible?
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