A mechanical royalty is a fee paid to the songwriter or publisher of a musical work whenever a copy of their song is made. This concept dates back to when compositions were physically, or “mechanically,” reproduced. Today, it applies to both physical formats and digital reproductions like downloads and streams. Understanding these royalties is fundamental for songwriters to be paid for their creative work.
The Two Copyrights In Music
Every song is composed of two distinct copyrights. The first is for the musical composition, which protects the underlying melody, harmony, and lyrics. This copyright is often referred to as the “song” or the “work” and is owned by the songwriter and their music publisher.
The second copyright is for the sound recording, often called the “master,” which protects a specific recorded version of a song. For example, many artists may record their own version of a classic song. Each of those recordings is a separate master with its own copyright, but they all share the same underlying composition. Mechanical royalties are tied exclusively to the composition copyright.
How Mechanical Royalties Are Generated
A mechanical royalty is generated whenever a musical composition is reproduced, regardless of the medium. This occurs across several formats, both physical and digital.
Physical Reproductions (CDs, vinyl, cassettes)
The manufacturing of physical music products generates mechanical royalties. When a record label presses CDs or vinyl records featuring a song, a royalty is owed for each copy made. This royalty is due for every unit manufactured, which is a distinction from other royalties that might be based on sales.
Digital Downloads (e.g., iTunes Store)
Permanent digital downloads also generate mechanical royalties. When a consumer buys and downloads a track from a service like the iTunes Store, that action creates a permanent copy of the song on their device. A mechanical royalty is generated for each download sold.
Interactive Streaming (e.g., Spotify, Apple Music, Tidal)
Interactive streaming services, where users choose songs on-demand, also generate mechanical royalties. The process of streaming creates a temporary copy of the song on the user’s device, which is considered a reproduction. This applies specifically to interactive streams, as non-interactive, radio-style services are treated differently under copyright law.
Who Pays and Who Gets Paid
The entity responsible for reproducing the song is the one that pays the royalty. For physical products like CDs or vinyl, the record label that manufactures and distributes the album is responsible for paying the mechanical royalties. For digital music, the responsibility shifts depending on the format.
For digital downloads and interactive streams, the digital service providers (DSPs) like Spotify, Apple Music, and Amazon Music pay the mechanical royalties. These companies make reproductions of songs available to their users and therefore owe a royalty for that right.
The recipients of these royalties are the owners of the composition copyright: the songwriter(s) and their music publisher(s). A music publisher works on behalf of the songwriter to license their compositions and collect the royalties they earn. The money flows from the record label or DSP to the publisher, who then pays the songwriter their share based on their agreement.
How Mechanical Royalties Are Collected and Distributed
Collecting and distributing mechanical royalties from millions of sources is a complex process. To manage this, mechanical rights organizations act as intermediaries, collecting royalties from music users and ensuring the funds reach the correct songwriters and publishers.
In the United States, The Mechanical Licensing Collective (The MLC) was established by the Music Modernization Act to administer blanket mechanical licenses for digital service providers. This means that platforms like Spotify and Apple Music pay their mechanical royalties for streams and downloads to The MLC, which then takes on the responsibility of identifying and paying the appropriate publishers and songwriters.
For physical products, the collection process has been handled by agencies such as the Harry Fox Agency (HFA). Record labels secure licenses and pay royalties through HFA, which then distributes the money to publishers. While The MLC now handles the bulk of digital mechanicals in the U.S., agencies like HFA continue to be involved in various licensing and royalty administration services.
The Mechanical Royalty Rate
The amount paid for a mechanical royalty is determined by a legal framework. In the United States, the “statutory mechanical royalty rate” is set by the Copyright Royalty Board (CRB). The CRB is a panel of three judges who oversee and adjust royalty rates periodically.
For physical formats and permanent digital downloads, the rate is a fixed amount per track. As of 2025, the rate is 12.7 cents for songs five minutes or less in length. For songs that are longer than five minutes, the rate is 2.45 cents per minute or fraction thereof. This rate is also subject to an annual cost-of-living adjustment to account for inflation.
The royalty rate for interactive streaming is more complex. It is based on a percentage of the streaming service’s revenue, subject to various calculations and minimums also set by the CRB. This structure means the per-stream payment can fluctuate based on the service’s financial performance and total number of streams.