Artist Glossary of Industry Terms: “Mechanical Royalties”

“Mechanical royalties” refer to monies paid to songwriters or music publishers for reproductions of songs in sound recordings (either for permanent downloads or streaming mechanicals). Mechanical royalties (or “mechanicals”) are usually paid by record companies (or outside the US, by digital retailers).

In the United States these rates are set by statute and have varied over the years. The historical rates for permanent downloads or compact discs are available from the U.S. Copyright Office. (http://www.copyright.gov/carp/m200a.pdf) The current minimum rate for a permanent copy (such as a digital download or a CD) of a song is 9.1¢. Different rates apply to certain kinds of subscription services and for other forms of exploitation.

Mechanical royalties are usually collected by music publishing administrators or music publishers, including collecting societies such as the Harry Fox Agency in the United States or CMRRA in Canada.Distinguish the mechanical royalty—a reproduction based royalty—from the performing right royalty—based on the public performance of a song.It’s also important to keep in mind that in the US digital retailers (such as iTunes) do not currently pay mechanical royalties directly to a publisher or collecting society. Instead, a US digital retailer will pay mechanical royalties for permanent downloads to the owner of the sound recording which will use the “pass through” license permitted in the US. Other rules apply outside the US which typically will see a digital retailer licensed by the prevailing authors rights society on a country-by-country basis.

Copyright 2010 Christian L. Castle. All Rights Reserved.

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