Mechanical Royalties: What Musicians Need to Know

Ever wonder how artists and songwriters are paid when songs are streamed and downloaded? Learn about the ways you can get paid mechanical royalties, who receives them, and more!

Of all the many types of music royalties that exist, mechanical royalties are perhaps the most straightforward. With a history dating back to the piano rolls of the early 1900s, the process of paying out mechanical royalties hasn’t changed all that much. Musicians nevertheless need to understand how they work, what determines their rate, and who is eligible to receive them. For the sake of simplicity, we’re focusing on mechanical royalties in the US only. Let’s start with the basics.

Want to brush up on the fundamentals? Check out Music Royalties: The Ultimate Guide

What are mechanical royalties?

Mechanical royalties are due whenever a piece of music is made available on a piece of physical media to the public for profit. To keep pace with the rise of digital music, mechanical royalties are also incurred whenever a song is downloaded or played on a streaming service. It’s worth noting that songwriters and publishers earn mechanical royalties every time their work is produced with the intention of being sold, regardless of whether the records or CDs actually do sell. It’s also important to understand that unlike other kinds of royalties, mechanical royalties are not determined by the free market, but rather by government regulation. 

Mechanical royalty rate by type of reproduction and distribution

The US Copyright Office’s Copyright Royalty Board (CRB) reviews mechanical rates every five years to determine if they need to be changed. The most recent revision, made in 2009, set the based mechanical royalty rates for physical media, downloads, and ringtones. There are some exceptions, but the current US rate for most mechanical royalties is 9.1 cents or 1.75 cents per minute of playing time or fraction thereof, whichever is larger.

Mechanical Royalties vs. Publishing Royalties

Music publishers connect songwriters and composers’ work with film productions, recording artists, advertising agencies or anyone else who might want to use these pieces of art in their own commercial projects. When a deal is made, they license the music, monitor its use and collect royalties.

Publishers’ share in the royalties — which could range between 10-50% — is called publishing royalties.

Mechanical royalties could be simply one of the royalty types publishers manage. For example, let’s say a publisher successfully pitched your song to a recording artist. That artist featured your song in her album, and it’s now on Spotify. Every time the song gets played, it generates mechanical royalties, which are split between you and the publisher.

Mechanical Royalties vs. Performance Royalties

The beauty of mechanical royalties is that they earn musicians money just for the right to reproduce their work. In the example above, your song got reproduced and distributed on someone else’s album - and you got paid for every CD containing that album, whether or not that CD ever got sold.

It gets a bit more complex when we talk about digital royalties, because online, a listener actually needs to stream your song for you to get paid.

That resembles performance royalties and could, understandably, get confusing.

Performance royalties are generated for the right to play your music in public, including on streaming services. Performance royalties are also earned from any form of non-interactive streaming services like Pandora, Spotify Radio, or any other medium where an audience isn’t in direct control of what they listen to. Streaming services are a win-win for musicians, because they generate both mechanical and performance royalties for the same track that got streamed. However, performance royalties are also generated when your music gets played on TV, on radio or in a commercial, public concert.

Who collects royalties for musicians and publishers?

Let’s review some common assumptions, then uncover who really collects these royalties.

Does Soundexchange collect mechanical royalties?

Yes, but only partial ones. On its website, SoundExchange explains that it “collects and distributes royalties for the featured artist and the sound recording copyright owner when content is played on a non-interactive digital source.”

According to Ari’s Take, “‘’noninteractive’ means you can’t choose your song. So, SiriusXM radio is noninteractive, whereas Apple Music and Spotify are ‘interactive.’ Beats1 (within Apple Music) is digital radio (noninteractive). Part of Pandora is still non-interactive as well.” Worth noting is the fact that Apple Music and Spotify both also have radio stations, which are not considered interactive.

What is the Mechanical Licensing Collective? 

“After years of advocacy, negotiations and preparation,” the Mechanical Licensing Collective (MLC) launched and started collecting these royalties on January 1, 2021.

Better yet, “the collection service will continue to regularly distribute these royalties at no cost to creators. The MLC’s $62 million budget is funded by the streaming services, as required by the MMA [the Music Modernization Act of 2018],” it added.

As creative and exciting as it can be, the music business is still a business and savvy musicians should take a keen interest in what their hard work is worth. So spend some time learning about how music royalties work, and then find a partner who’ll help you feel confident that you’re getting everything you’re owed. We’re musicians and music execs ourselves at Trqk, so we have first-hand experience with the unique challenges of the royalty process. We use data science and business intelligence to provide a holistic view of your royalties. Our mission is to help keep the music creator economy transparent and fair. Get in touch to learn more about what Trqk can do!