Mechanical Royalties Explained: What They Are and How to Collect Them

Key Takeaways

• Mechanical royalties are payments to songwriters and publishers for the reproduction and distribution of musical compositions in physical, download, and streaming formats.

• Statutory rates apply: 9.1 pence per song for physical and downloads, and 15.1% of revenue or per-stream rates for streaming.

• Mechanical royalties are separate from performance royalties and are managed by organisations like the Mechanical Licensing Collective (MLC) and Harry Fox Agency (HFA).

• To collect mechanical royalties, register each song with MLC or relevant collection societies and ensure accurate songwriter and publishing information.

• Regularly monitor registrations and industry updates to avoid unclaimed royalties and maximise earnings from all available sources.

Defining Mechanical Royalties

Mechanical royalties constitute legally mandated payments made to songwriters and publishers for the authorised reproduction and distribution of musical compositions in both physical and digital formats.

Under the framework of mechanical licensing, these royalties apply to uses such as physical sales, permanent downloads, and digital streaming. Statutory rates determine the amounts owed; for example, 9.1 pence per song is set for physical formats and downloads, while on-demand streaming platforms allocate mechanical royalties based on a percentage of their revenue, recently raised to 15.1% by 2022.

Royalty collection is administered by entities such as the Mechanical Licensing Collective (MLC) and the Harry Fox Agency (HFA), ensuring that rights holders receive proper compensation.

Accurate understanding and proactive management of mechanical royalties are essential for protecting creators’ contractual and statutory rights.

The History and Legal Basis of Mechanical Royalties

Although the concept of compensating songwriters for the reproduction of their works predates modern statutes, the legal foundation for mechanical royalties in the United States was firmly established by the 1909 Copyright Act.

This Act codified the right of music publishing entities and songwriters to receive payment for the reproduction of their musical compositions. Mechanical royalties are contractually mandated whenever a composition is reproduced, whether on physical formats like CDs or through digital streaming services.

The Copyright Act further prescribes that designated organisations, such as the Mechanical Licensing Collective (MLC) and the Harry Fox Agency (HFA), administer the collection and distribution of these royalties.

Amendments under the Music Modernisation Act (MMA) in 2018 introduced periodic rate evaluations, enhancing the adaptability of mechanical royalty frameworks to current market conditions.

How Mechanical Royalties Differ From Other Music Royalties

Mechanical royalties are contractually distinct from performance royalties, as they compensate rights holders for the reproduction of compositions rather than for public performances.

These royalties are tied specifically to the underlying musical work, not the sound recording, and are collected through separate licensing channels.

Payment structures and collection societies further differentiate mechanical royalties from other revenue streams, underscoring the need for clear rights management.

Mechanical vs. Performance Royalties

While both mechanical and performance royalties pertain to the rights of songwriters and copyright holders, they originate from fundamentally distinct uses of a musical composition.

Mechanical royalties arise from the reproduction of the composition, such as when a track is pressed onto vinyl, sold as a digital download, or streamed on demand. In contrast, performance royalties are triggered when a song is publicly performed—on the radio, live venues, or streaming platforms.

Mechanical royalties in the UK are typically collected via agencies like the Mechanical Licensing Collective, whereas performance royalties are administered by Performing Rights Organisations (PROs).

• Mechanical royalties: generated from duplication and distribution.

• Performance royalties: derived from public performances and broadcasts.

• Distinct collection agencies: MLC for mechanical, PROs for performance royalties.

• Contractual clarity is needed to claim both revenue streams.

Composition vs. Recording Royalties

Beyond the distinction between mechanical and performance royalties, a further legal separation exists between rights tied to a song’s composition and those attached to its master recording.

Mechanical royalties are generated by the reproduction of a song’s underlying composition, with payments allocated to the holders of the composition copyright—typically songwriters and music publishers. These royalties arise whenever a copy is made, whether via CD, vinyl, download, or stream, and are distinct from recording royalties.

In contrast, recording royalties derive from the exploitation of the master recording copyright, compensating recording artists and master owners for the use or distribution of the specific recorded performance.

This bifurcation in copyright law establishes separate and non-overlapping revenue streams, each governed by its own statutory rates, contractual obligations, and collection mechanisms.

Payment Channels Compared

Royalty payment channels in the music industry are strictly delineated according to the nature of the underlying rights and the statutory mechanisms governing them.

Mechanical royalties, tied to the reproduction and distribution of compositions, are administered by agencies such as the Mechanical Licensing Collective (MLC) in the United States. In contrast, performance royalties, generated from public performances, are collected by Performing Rights Organisations (PROs) like ASCAP and BMI.

Payment allocation and statutory rates further distinguish these channels, impacting both publishers and songwriters. Significantly, the distribution of mechanical royalties often occurs via publishers, while performance royalties are typically remitted directly to creators.

• Mechanical royalties: paid via MLC or similar agencies

• Performance royalties: collected by PROs

• Statutory rates differ by royalty type

• Payment flows depend on publishing rights structure

Who Receives Mechanical Royalties

Recipients of mechanical royalties are primarily determined by the legal rights granted to songwriters and music publishers for the reproduction of their musical works.

Under prevailing licensing frameworks, mechanical royalties are contractually allocated between the songwriter and the Music Publisher, typically on a 50/50 basis, unless an alternative split is stipulated in a publishing agreement.

Rights organisations such as the Mechanical Licensing Collective (MLC) and the Harry Fox Agency (HFA) facilitate the collection and distribution of these royalties to the appropriate rights holders.

Independent artists who serve as their own publishers are entitled to claim 100% of mechanical royalties, provided they are registered with the relevant collection agencies.

Additionally, original songwriters maintain entitlement to royalties when their works are reproduced by third-party performers, including through cover versions.

Mechanical Royalties Across Different Music Formats

Mechanical royalties are calculated differently depending on the format, with statutory rates governing physical media and digital downloads, and revenue-based formulas applied to streaming platforms.

Physical sales and downloads in the United States typically trigger a fixed per-unit royalty, while streaming services remit royalties based on a percentage of revenue or a per-stream basis.

Contractual and regulatory frameworks consequently determine compensation for rights holders across each distribution method.

Streaming Platform Royalty Calculations

While the fundamental purpose of mechanical royalties remains consistent across music formats, the methods by which streaming platforms calculate these payments differ considerably from those used for physical albums and digital downloads.

Streaming services employ a per-stream calculation, typically paying mechanical royalties at a rate of approximately £0.0012 per stream. This model requires about 1.6 million streams to generate £1,000 in mechanical royalties, reflecting a distinct royalties flow compared to traditional formats.

The UK Copyright Royalty Board (CRB) regularly reviews and adjusts these rates, ensuring compliance with statutory frameworks and market realities.

• Mechanical streaming rate: ~£0.06 per 100 streams

• 1.6 million streams = £1,000 in royalties

• CRB reviews and updates rates every five years

• Rates are influenced by both statutory law and market conditions

Physical Media Royalty Rates

Compared to the fluctuating per-stream calculations employed by digital platforms, physical music formats such as CDs and vinyl adhere to a statutory mechanical royalty rate of 9.1 pence per song per copy distributed.

This rate, established under UK copyright law, guarantees that rightsholders receive a predictable and enforceable payment structure for each unit of physical media sold.

For independent artists, this means approximately 11,000 physical formats must be sold to generate £1,000 in mechanical royalties.

The application of this royalty rate is contractually mandated, leaving little room for negotiation or variation among physical releases.

This statutory approach enables both publishers and songwriters to monitor and enforce their rights efficiently, guaranteeing fair compensation for the exploitation of compositions through physical distribution channels.

Download Sales Remuneration

Historically, digital download sales have adhered to the same statutory mechanical royalty rate of 9.1 pence per song as physical media, ensuring contractual consistency and legal clarity for rightsholders.

This fixed rate applies to each permanent download sold on platforms like iTunes and Amazon, aligning digital and physical distribution models.

Despite the exponential growth in digital markets, the statutory rate for mechanical royalties from download sales has remained unchanged for over a decade.

In contrast, streaming royalties are calculated on a per-stream basis, often resulting in considerably lower earnings per use compared to downloads.

• Artists must sell about 11,000 downloads to earn £1,000 in mechanical royalties.

• The 9.1 pence rate has not increased despite rising digital sales.

• Download sales compensation structures mirror those for CDs and vinyl.

• Streaming royalties generate about £0.06 per 100 streams.

Mechanical Royalties From Streaming Services

Although streaming platforms have transformed music consumption, the calculation and allocation of mechanical royalties from these services remain governed by explicit statutory and contractual frameworks.

Mechanical royalties from streaming services are typically calculated at approximately £0.0012 per stream, with about half attributed to the composition’s mechanical royalties. As a result, songwriters and publishers must achieve substantial streaming volumes—nearly 1.6 million streams to generate £1,000 in mechanical royalties—due to the relatively low per-stream rate.

The Music Modernisation Act has materially revised the statutory rate for on-demand streaming, elevating the mechanical royalty rate to 15.1% by 2022. Furthermore, understanding Spotify's pay-per-stream model can provide insights into maximising revenue from streaming platforms.

In the United States, organisations such as The Mechanical Licensing Collective (MLC) are responsible for the collection and distribution of these royalties, ensuring compliance and rights-holder compensation.

Mechanical Royalties From Physical Sales and Downloads

Beyond streaming, mechanical royalties arising from physical sales and digital downloads are governed by a set statutory rate, currently fixed at 9.1 pence per song. This statutory rate applies uniformly, whether the music is distributed as physical products—such as CDs or vinyl—or as digital downloads.

The process guarantees that songwriters and publishers receive a predictable, contractually enforceable payment per unit sold or downloaded. For artists, the mechanical royalties from these sales directly impact their total revenue, making compliance with statutory obligations critical for all parties involved in music distribution.

• Mechanical royalties for physical sales and digital downloads are identical, set at 9.1 pence per song.

• Approximately 11,000 units must be sold to generate £1,000 in royalties.

• Statutory rates have remained unchanged for over a decade.

• Consistent application of these rates guarantees transparency in royalty calculations.

Setting and Regulating Mechanical Royalty Rates

When determining mechanical royalty rates in the United States, the Copyright Royalty Board (CRB) holds exclusive regulatory authority, conducting formal proceedings every five years to establish statutory rates.

These proceedings incorporate detailed stakeholder input, including submissions from songwriters, publishers, and streaming services.

The Music Modernisation Act (MMA) has notably affected this process by introducing a fair-market value framework, replacing the prior restrictive standards.

Under the MMA, the CRB now applies a willing-buyer, willing-seller approach when setting mechanical royalty rates, allowing for market-based rate adjustments.

As of 2022, the mechanical royalty rate for on-demand streaming is set at 15.1%, while the physical and download rate remains at 9.1 cents per copy.

The CRB’s determinations directly shape contractual rights and industry earnings.

Key Organisations for Mechanical Royalty Collection

Mechanical royalty collection in the United States is principally managed by the Mechanical Licensing Collective (MLC) and the Harry Fox Agency (HFA), each operating under distinct statutory and contractual frameworks.

Internationally, collection societies such as the Mechanical-Copyright Protection Society (MCPS) administer rights and guarantee compliance with local and cross-border licensing agreements.

These organisations serve as critical intermediaries, safeguarding the rights of songwriters and publishers through structured royalty tracking and disbursement mechanisms.

The Mechanical Licensing Collective

Established pursuant to the Music Modernisation Act 2018, the Mechanical Licensing Collective (MLC) serves as the designated entity for administering and distributing digital mechanical royalties from UK streaming services.

The MLC’s mandate is to centralise royalty collection and guarantee that rights holders receive accurate, timely payments. By maintaining a thorough, authoritative database, the Mechanical Licensing Collective addresses incomplete or missing song registrations that historically resulted in “black box” royalties.

Membership for songwriters is free, allowing them to retain 100% of their mechanical royalties, paid on a monthly basis. The MLC operates in parallel with other agencies, such as the Harry Fox Agency, but is uniquely tasked with resolving digital royalty complexities.

• Centralised royalty administration

• Monthly direct payments to rights holders

• Free songwriter membership

• Resolution of unclaimed “black box” royalties

International Collection Societies

International collection societies serve as pivotal entities in the global administration and distribution of mechanical royalties.

These societies, often operating regionally, are mandated to collect and disburse royalties to rights holders, ensuring compliance with local statutory frameworks.

In Europe, collection societies calculate mechanical royalties based on a percentage of the published price to dealer (PPD), currently set at approximately 8.712%, in contrast to the US “penny rate” system.

The Mechanical Licensing Collective (MLC) in the United States exemplifies a statutory body established to streamline digital mechanical royalty collection, a function mirrored by equivalent organisations internationally.

Accurate registration of song shares with international collection societies is contractually essential; failure to register may cause royalties to be diverted to unclaimed “black box” funds, resulting in forfeiture of rights holder revenues.

Role of Harry Fox

The Harry Fox Agency (HFA) serves as a principal intermediary in the United States for the administration and collection of mechanical royalties, representing a substantial majority of music publishers in the market.

HFA’s legally defined role involves facilitating the issuance of mechanical licences for the reproduction of musical compositions and ensuring compliance with statutory licensing requirements. By acting as an agent for music publishers, HFA streamlines the complex process of royalty collection from major digital platforms, protecting the contractual and financial rights of rights holders.

• Covers approximately 70% of the U.S. mechanical royalty market for music publishers.

• Manages statutory licensing notices and mechanical royalty payments for platforms such as Apple Music and Amazon.

• Enables songwriters and music publishers to register works for royalty tracking and claims.

• Operates alongside the Mechanical Licensing Collective (MLC) post-MMA.

Registering Your Music for Mechanical Royalty Payments

Although many musicians focus on creating and distributing music, securing mechanical royalty payments requires formal registration with a recognised Mechanical Licensing Collective (MLC) or a mechanical rights agency such as the Harry Fox Agency (HFA).

Registering your music with the MLC is a contractual prerequisite for eligibility to receive mechanical royalties from streaming and digital downloads. Independent musicians benefit from direct MLC registration at no cost, ensuring full retention of mechanical royalty entitlements.

Accurate documentation of song splits and songwriter contributions is essential, as the MLC has previously held substantial unmatched and unclaimed royalty funds due to incomplete registrations.

Additionally, affiliation with a Performing Rights Organisation (PRO) enables collection of performance royalties in parallel. Digital distribution platforms may facilitate this process, but legal responsibility remains with the rights holder.

Steps to Claiming Mechanical Royalties as an Artist

To secure mechanical royalties, an artist must first register each composition with the Mechanical Licensing Collective (MLC) and any relevant international agencies.

Accurate documentation of songwriting splits is essential to guarantee all rights holders receive proper payment under contractual agreements.

Additionally, artists should actively monitor and claim international royalties to prevent the loss of income from global exploitation of their works.

Register Songs With MLC

Proper registration with The Mechanical Licensing Collective (MLC) constitutes a critical prerequisite for artists seeking to secure mechanical royalty payments from digital streaming services.

Artists, especially independent artists, must register songs with the MLC to guarantee lawful entitlement to mechanical royalties. The process is contractually straightforward and free, allowing 100% of royalties to be collected without publisher involvement.

Accuracy in registration is paramount, as incomplete information may result in unclaimed royalties entering a “black box,” forfeiting rightful earnings. Direct registration is open to all songwriters, reinforcing equitable rights and regular monthly royalty payments.

• Registering songs with the MLC is free and guarantees full royalty collection.

• Independent artists can register directly without a publisher.

• Monthly royalty disbursement enhances consistent revenue streams.

• Inaccurate registration may result in lost, unclaimed royalties.

Settle Songwriting Splits

Every songwriter, producer, or contributing artist must formalise songwriting splits prior to the release of any musical work to establish clear legal rights and financial entitlements.

Settling songwriting splits at the outset prevents future disputes regarding mechanical royalties by providing a transparent record of each party’s contribution. This is customarily achieved through a split sheet, documenting the precise percentage ownership for each collaborator.

Accurate splits are essential for registering works with the Mechanical Licensing Collective (MLC) and Performing Rights Organisations (PROs), thereby ensuring each creator is properly credited and eligible to receive their share of mechanical royalties.

Regular communication with a music publisher or royalty collection agency is strongly advised, as these entities play a key role in tracking, claiming, and distributing mechanical royalty income to all entitled parties.

Track International Royalties

Once songwriting splits are formally documented, claiming and tracking mechanical royalties on an international scale requires a series of rights-focused administrative actions.

Artists must ensure their works are registered with a mechanical collection society in their home country and with each relevant foreign society where their music is distributed. Failure to register can cause international royalties to be misallocated to a “black box,” leaving rightful owners uncompensated.

Given that digital platforms remit royalties under blanket licences to these societies, registration and compliance with local copyright laws are paramount. Understanding the global framework of mechanical royalties enables more complete and timely collection for every stream or sale abroad.

• Register works with every relevant mechanical collection society

• Monitor international royalty statements for discrepancies

• Understand local copyright regulations in each country

• Avoid unclaimed “black box” royalties through proactive administration

Role of Music Publishers in Mechanical Royalty Collection

A music publisher’s primary responsibility in mechanical royalty collection centres on the registration and administration of song copyrights, ensuring accurate tracking and claiming of royalties owed to songwriters. Music publishers secure exclusive rights to manage mechanical royalties, facilitating efficient royalties collection from digital platforms and collection societies. Under standard agreements, publishers receive full administration rights, streamlining the process of identifying, monitoring, and claiming mechanical royalties on behalf of their clients. In co-publishing deals, contractual terms typically allocate up to 75% of collected royalties to songwriters after recoupment of advances. Independent musicians benefit from music publishers’ expertise, mitigating risks of unclaimed royalties or administrative oversights. Additionally, understanding mechanical royalties is vital for songwriters to ensure they receive all due payments for their compositions.

International Mechanical Royalty Systems

Building on the administrative functions performed by music publishers, mechanical royalty systems differ considerably across international jurisdictions, each governed by distinct statutory frameworks and licensing practices.

In developed nations, collection societies collaborate with performance rights organisations to guarantee accurate collection and distribution of international mechanical royalties.

For example, the U.S. and Canada employ a fixed “penny rate” system, while European jurisdictions utilise a percentage-based calculation from the Published Price to Dealer (PPD).

International streaming platforms often rely on blanket licences, remitting a portion of annual revenue to collection societies, thereby simplifying cross-border royalty payments.

• U.S. and Canada: Statutory “penny rate” for mechanical royalties (9.1 cents per copy)

• Europe: Percentage of PPD (currently about 8.712%) for royalty calculations

• Blanket licensing for international streaming services

• Registration of song shares is essential to avoid unclaimed “black box” royalties

Common Challenges in Collecting Mechanical Royalties

Why do so many songwriters fail to receive the full mechanical royalties to which they are entitled? Common challenges stem from a lack of awareness regarding the legal necessity of registering works with the Mechanical Licensing Collective (MLC) or other relevant mechanical rights organisations.

Failure to complete these registrations often results in unclaimed royalties accumulating in “black box” funds. Additionally, independent artists unfamiliar with music publishing contracts may not leverage the expertise of a publisher, thereby missing critical steps in tracking and claiming owed royalties.

Administrative delays, particularly through agencies like the Harry Fox Agency, compound the difficulties by prolonging payment timelines. In addition, evolving regulations and changes in royalty rates—such as those enacted by the Music Modernisation Act—introduce ongoing complexities to the collection process.

Maximising Your Earnings From Mechanical Royalties

Addressing the barriers to collecting mechanical royalties requires a proactive, rights-driven approach. Maximising earnings in music publishing hinges on meticulous rights registration, vigilant tracking, and utilising industry frameworks.

Ensuring that royalties are collected for every use of a composition involves not only distributing works on major digital service providers but also registering with a mechanical rights organisation such as the MLC or MCPS. Understanding the statutory rates and recent legislative changes, such as the Music Modernisation Act, is essential for projecting and securing accurate payments. Furthermore, streaming royalties serve as a critical aspect of earning potential, making it vital for artists to grasp how these rates impact their overall income.

Engaging a music publisher or a specialised royalty collection agency further safeguards against lost income. Artists must continually monitor industry updates to maintain compliance and capture all due mechanical royalties.

• Register all works with reputable rights organisations

• Distribute music on major streaming platforms

• Stay informed about statutory and streaming royalty rates

• Employ a music publisher or royalty collection agency

Frequently Asked Questions

How Are Mechanical Royalties Collected?

Mechanical royalties are collected through licensing agreements administered by collection agencies, which monitor distribution channels and calculate payments based on statutory royalty rates. These agencies then distribute collected royalties to rights holders, ensuring legal compliance and contractual obligations are met.

What Are Mechanical Royalties and When Are They Paid?

Mechanical royalties are statutory payments owed under copyright law for the reproduction and distribution of musical works. Triggered by music licensing activities, they are paid according to established royalty rates whenever a song is copied, streamed, or sold.

What Are Mechanical Royalties?

Mechanical royalties are statutory payments owed to rights holders for the licensed reproduction and distribution of copyrighted music under mechanical rights. Royalty calculations are governed by copyright laws and guarantee compensation when compositions are reproduced physically or digitally.

How Are Royalties Collected?

Royalties are collected through established royalty collection methods, typically managed by rights societies. Digital streaming impacts these processes, requiring accurate tracking and distribution, thereby ensuring songwriter compensation aligns contractually with usage, licensing agreements, and territorial rights regulations.

Conclusion

In conclusion, mechanical royalties constitute a fundamental right for songwriters and publishers, securing compensation for the reproduction and distribution of their works. Understanding the legal structures, collection mechanisms, and contractual obligations is essential for rights holders to guarantee proper remuneration. By navigating the complexities of domestic and international royalty systems, and proactively managing publisher relationships, stakeholders can safeguard their interests and maximise their earnings in accordance with the evolving legal environment governing mechanical royalties.