Mechanical royalties refers to the money that is collected by either a music publishing company or a royalty collection agency on behalf of its clients e.g recording artists, music producers and songwriters.
This mechanical royalty income is derived from the distribution of music in the form of, but is not contractually limited to:
- Physical CDs
- Vinyl Records
- Cassette Tapes
- Video Tapes
- Music Streaming Service (e.g Spotify, Apple Music, Tidal, Amazon Music e.t.c)
Mechanical Royalties Collection
The manufacturing and distribution of either physical CDs and Vinyl records means a music publishing company will be owed mechanical royalties for each and every single sale that takes place. Eventually this money will be paid to the publishing copyright holders and that’s usually the recording artist, songwriter or the music producer.
NOTE: So whether if it’s an entire Album or just a Single sold; the fact of the matter remains and that is: mechanical royalties will be due to the rightful music publishing company.
Record Labels and Mechanical Royalty Payments
The general convention is that a record label is suppose to pay mechanical royalty payments to the artist’s music publishing company. But ONLY IF an artist didn’t make the ignorant mistake of signing away their music publishing copyrights.
For example, when a record label sells music whether it’s via physical CDs, Vinyl or DVDs the aftermath is that a record label will have to settle the obligation to make mechanical royalty payments based on each and every unit sold.
Mechanical Royalty Calculations
The government in every country is responsible for setting what is a called the “statutory royalty rate” and this statutory royalty rate changes all the time based on new legislation so it’s always advised to keep yourself updated.
For example, if the statutory royalty rate is set by the government to be 9 cents for every song with a duration of less than 5 mins, this of course, means when a record label sells 100 000 units they have to pay mechanical royalties amounting to $9 000.