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Mechanical Royalties: Everything You Need to Know

Author: Caleb J. Murphy

Date: January 10, 2020

Reads: 266


Caleb J. Murphy is a Songwriter/Producer based in Austin, TX. He is the founder of Musician With A Day Job, a blog to help part-time musicians succeed. He is also a contributor to CD Baby's DIY Musician blog, Sonicbids, and Bandzoogle. His work has been shared by ASCAP, Hypebot, and Music Think Tank.
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Royalties can be very confusing.

There are several types owed to several parties and collected by different organizations.

But mechanical royalties may be the most confusing. In this post, I hope to simplify this topic so any musician can understand it.

Here’s what you’ll see in this guide to mechanical royalties:

  • What Are Mechanical Royalties?
  • A Quick History of Mechanical Royalties
  • How to Earn Mechanical Royalties
  • Who Collects Mechanical Royalties?
  • How to Sign Up With a Publishing Administration Company
  • Follow These Steps to Ensure You Get Paid

A Quick History of Mechanical Royalties

A music royalty is generated when someone uses a copyright. And there are two copyrights associated with every song: the composition (written form of the song — lyrics, chords, sheet music) and the recording (even if you never publicly release the recording).

That brings us the name “mechanical royalties.” Why that name?

Well, this goes back to when songs were mechanically produced on vinyl records and piano rolls (originally used to operate player pianos).

Here’s an example: if someone wanted to buy a piano roll for their player piano, they had to get a mechanical royalty, which would be paid to the owner of the composition on the piano roll.

The United States government sets mechanical royalty rates depending on the terms of the U.S. Copyright Act, which first came about in 1909. Up until then, Music Publishers dictated the music industry.

Until recently, mechanical royalties applied to physical reproductions of music, like CDs, vinyl records, and cassettes. But today, this can refer to digitally streamed and downloaded songs.

So you can see why it’s confusing to still call these royalties “mechanical.” But that’s where we are.

All of this has changed how Songwriters are paid these royalties.

How to Earn Mechanical Royalties

Remember, there are two halves to every song (i.e. two copyrights): the composition half and the recording half. Mechanical royalties compensate the Composer/Songwriter for each use of their song.

In general, here are some ways you can earn mechanical royalties as a Songwriter2:

  • When someone streams, downloads, or buys your song.
  • When people use your song as a ringtone or in a greeting card.
  • When people cover your song and release their recording of it.
  • When someone samples your song in their own song.
  • When someone sings your song as a karaoke song.

If you remember from our brief history lesson above, the U.S. government sets the rate of payment for mechanical royalties. Currently, it’s 9.1 cents per download and roughly $0.0007 per stream. The streaming rates can vary depending on the streaming platform, but it’s 8-10% of the total stream3.

But how do you get these mechanical royalties?

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Who Collects Mechanical Royalties?

Your Publishing Rights Organization does not collect mechanical royalties. PROs collect only performance royalties.

In order to get the mechanical royalties you deserve, you’ll need to sign up with a publisher/publishing admin company or a royalty collections company. Publishing admin companies like Songtrust and Sentric are good examples.

“ . . .If you sign up for an admin publishing company (like Songtrust, Sentric, CD Baby Pro or Tunecore Publishing),” writes Ari Herstand on his blog, Ari’s Take4, “they will collect your publishing money from your PRO, take their commission (15-20%), and pay you out the rest.”

In the United States, the Harry Fox Agency is the entity that collects mechanical royalties. Any publishing admin company you work with gets their info or works directly with HFA.

HFA will hold onto your mechanical royalties for about three years until a Publisher or publishing admin company collects them.

How to Sign Up With a Publishing Administration Company

First, you should be signed up with a PRO already, like ASCAP or BMI (or SOCAN if you’re in Canada).

Next, you’ll want to sign up with a publishing admin company.

Two of the biggest publishing admin companies are Songtrust and Sentric Music Publishing, but many digital distributors offer this service as well, like CD Baby and Tunecore.

The only thing about bundling your distribution with your publishing admin is that if you want to use a different distributor, then your original distributor can no longer be your publishing admin. That’s why it seems best to get a standalone company to collect your mechanical royalties, regardless of through whom you distribute your music.

If you want to go with Songtrust, simply visit their registration page, pay the $100 one-time setup fee, and start entering the information about all your songs. You may want to check out their features and pricing before you sign up. The highlights are that you keep 100% of your copyrights, sync licensing rights, and you can cancel anytime after one year. Also, they’ll keep 15% of the royalties for their trouble.

With Sentric, you sign up for free and start entering in your song information. Then they’ll register your songs in over 65 territories so they can start collecting royalties. They also have individualized help along the way, which is nice. They take 20% of the royalties they collect and put you on a 28-day rolling contract. Plus, through Sentric, you can apply to get your music placed on TV, ads, films, and video games5.

If you do want your publishing services bundled through your music distributor, you can easily select that as an option when you distribute your music through CD Baby or Tunecore.

Follow These Steps To Ensure You Get Paid

Just to wrap things up in a clear and concise fashion, here are the steps you can take to make sure you get paid the royalties you’re owed, mechanical and others:

  • Register with a Publishing Rights Organization (BMI and ASCAP are the biggest PROs in the U.S., SOCAN is Canada’s PRO).
  • Sign up with a publishing admin company like Songtrust or Sentric and register your songs. Alternatively, add on the publishing admin services your music distributor (like CD Baby and Tunecore) may offer.
  • Sign up with SoundExchange, which is an organization that collects your digital performance royalties.
  • Read our guide on all the different types of music royalties.
  • Read this in-depth post about how to collect all the music royalties you’re earning.

Now, go collect all the royalties you deserve!

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References

  1. 1. "Mechanical Royalties Guide | 2019". Royalty Exchange. published: 17 January 2019. retrieved on: 30 December 2019
  2. 2Starr, Liane Bonin. "What Are Mechanical Royalties?". Songtrust. published: 5 March 2019. retrieved on: 30 December 2019
  3. 3Herstand, Ari. "How to Get All of the Royalties You Never Knew Existed". Digital Music News. published: 15 February 2016. retrieved on: 30 December 2019
  4. 4Herstand, Ari. "How To Get All Your Music Royalties: ASCAP, BMI, PRS, SoundExchange, PROs And The Rest". Ari's Take. published: 9 May 2019. retrieved on: 30 December 2019
  5. 5. "What We Do". Sentric Music. published: . retrieved on: 30 December 2019
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