Music publishing royalties explained: what is a mechanical royalty?

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What is a Mechanical Royalty?

How does a songwriter earn money? —— [Insert your own punchline here.]

But the real answer is… music publishing!

If you’re a songwriter, there are a number of different kinds of publishing royalties you can earn from the usage of your original music.

One of the big sources of publishing revenue is performance royalties, generated when your music is played on the radio, television, or in a live venue.

An even bigger source of income for songwriters (at least for the music industry at large) is the mechanical royalty, generated by the reproduction of your music in mechanical or virtual form, whenever CDs are manufactured, downloads are purchased, or your songs are streamed on-demand.

Mechanical royalties and independent songwriters

Wikipedia says:

The term “mechanical” and “mechanical license” has its origins in the “piano rolls” on which music was recorded in the early part of the 20th Century. Although its concept is now primarily oriented to royalty income from sale of compact discs (CDs), its scope is wider and covers any copyrighted audio composition that is rendered mechanically; that is, without human performers.

In a nutshell: every time a song you’ve written is manufactured to be sold in a CD, downloaded on a digital music retail site, or streamed through services like Spotify and Apple Music, you are owed a mechanical royalty. Traditionally, mechanical royalties have also been more difficult for independent songwriters to collect on their own, without the help of a publishing adminstrator. That’s where CD Baby Pro comes in (more on that later).

Now for the longer explanation of mechanical royalties…

As a songwriter/publisher, you are owed a royalty every time your composition is reproduced (on vinyl, tape, CD, MP3, etc). In the United States, this royalty is generally equal to 9.1 cents per reproduced “copy” of that song, depending on the length of the song, regardless of whether those albums or singles are sold.

The mechanical royalty rate for interactive, on-demand streams through services like Spotify and Apple Music is far lower than 9.1¢. But mechanical royalties for global streaming can really add up — especially because they’re generated with every LISTEN, unlike the one-time mechanical royalty generated by a download purchase or CD manufacture.

In many cases, for every $100 your sound recording has generated on Spotify, there could be another $15 owed to you in (uncollected) mechanical royalties.

That’s YOUR money just sitting there, and Performing Rights Organizations such as ASCAP and BMI do NOT collect mechanical royalties, which is one of the big reasons a publishing rights administrator like CD Baby Pro can be so helpful for independent artists.

[Check out “3 ways to earn money from your music on Spotify.”]

But let’s get back to mechanical royalties for CD sales and downloads for a second…

If someone covers one of your songs and they manufacture 1000 CDs — they owe you $91, regardless of whether those CDs ever get purchased by customers. If they sell 100 MP3s of your song, they owe you $9.10.

You are also owed a mechanical royalty for the sales of your music on YOUR OWN albums. But here’s where things get a little virtual; if you’re acting as your own label and putting out music that you’ve written, you’ll effectively be paying that royalty to yourself from album proceeds.

At least that’s how it works in the US, where download retailers like iTunes and Amazon pass on that mechanical royalty to you as part of the net payment for the sale of the MP3. But in many countries outside the US, mechanical royalties are set aside BY the retailer, to be paid to collection societies who then distribute those royalties to publishers and writers. A similar system is set up for the payment of mechanical royalties generated by global streaming.

BUT again, performing rights organizations like ASCAP and BMI do NOT collect mechanical royalties. Their job is to collect performance royalties, NOT mechanicals. So…

How do you collect “foreign mechanicals” generated outside the US?

In order to collect international mechanical royalties (as well as mechanicals for both global and domestic streams) on your own, you’d need to register your music with many royalty collection societies around the world.

As our friend Justin Kalifowitz of SongTrust is fond of saying, you CAN do it yourself if you really want to — but you’ll probably have to stop making music for a while. Affiliating yourself and registering your songs directly with all the international collection societies would not only take hundreds of hours of paperwork and filling out online forms, but you’d need to be proficient in dozens of languages — or hire a translator. And who wants to do that when you’ve got gigs to play?

That’s where CD Baby Pro comes in. We do all that work for you — registering songs directly with societies around the world — and then we’ll make sure you get paid ALL the publishing royalties you’re owed.

Stop leaving money on the table; sign up for CD Baby Pro today — available in territories around the world!

Publishing 
Guide: Make More Money From Your Music

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  • Pingback: Who Owns Your Music Publishing Rights, & How are the Royalties Split? DIY Musician Blog()

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  • In Europe, most music retailers hold the mechanicals (unlike in the US where they’re paid as part of the normal sales revenue) — which then need to be collected on behalf of the writers/publishers. So yes, depending of course on sales and activity, there can be a large amount of uncollected mechanicals from international download sales. (Some CD Baby artists have collected thousands in foreign mechanicals). And as for streaming mechanicals, they’re obviously not huge per stream, but they add up quick.

    @ChrisRobley

  • They differ all the time, based on the kind of listener (free ad-supported tier vs. paying subscriber, for instance, in the case of Facebook), the kind of ad served up, etc. The best way to get a feel for it is to look at your accounting statement from CD Baby or other distributor across several months.

    @ChrisRobley

  • HRFLIKK

    CD Baby Pro is just for americans an canadiand, thet suck

    • It’s also available in the UK. We’re working to expand it beyond those three countries though.

      @ChrisRobley

      • HRFLIKK

        expand?? yeye, when im old and grey?. When Youtube is allready making it happen, so why dont cdbaby able to to the same. i get paid for my youtube streams, and i live in skandinavia, NOT us, NOT can, NOT uk. make it happen! or i tink other companies wild look at this as an opportunity to make money and snatch the market away from you! i would! make a company just based on streaming, not sales. here in scandinavia only maby 5% buy music, the rest of 95% JUST streams, mostly on youtube. so sales of music isent so intresting!! Streaming rules!

  • Yes, there is a statutory rate for publishing mechanicals for interactive services in the US.

    Couple of points on this:

    • the royalty rate is not set as a per-stream rate but rather as a percentage of income, or a percentage of the sound recording royalty deal for these services. Here is a quick distillation that Billboard did when the rates were set back on 2012 that is useful: https://www.billboard.com/biz/articles/news/publishing/1098005/copyright-royalty-board-to-set-mechanical-royalty-rates-for

    • some services choose to use this rate, others choose to negotiate rates directly with the publishers.

    • the non-interactive review that is going on now is not for mechanical royalties, but sound recordings (paid through Soundexchange in the US). there is no mechanical royalty for non-interactive services (just performance royalties for publishing).

    @ChrisRobley

  • A sync placement on TV will earn you performance royalties via your PRO (ASCAP, BMI, etc.) and paid to them by the network/s. involved. Often you’ll also get an upfront sync licensing fee for both the usage of the sound recording AND the usage of the composition.

    2. Regarding the placement company, are you talking about mechanical sync uses such as in a video game? That would normally require a mechanical fee per copy (though most, these days, get negotiated at a flat rate for unlimited). That being said, none of that would affect CD Baby Pro because we don’t handle sync rights whatsoever.

    @ChrisRobley

  • Mechanical royalties would be based on “reproductions” of the composition, so in the digital realm that means it’d be based on downloads redeemed, NOT the number of cards you print. Since we’re in the US, the retailer (CD Baby in this case) would pay YOU (the owner of the sound recording), and then it’s your responsibility to pay the publisher/writer that mechanical royalty.

    @ChrisRobley

  • Keep in mind, I’m not a lawyer, so this isn’t expert legal advice, but my understanding is:

    The cost/revenue isn’t really a factor. The publisher is owed their 9.1 cents per reproduction (which includes digital reproductions in the form of a download). Also, it’s the location of the retailer that’s important. So, if it was a download from CD Baby, you would be responsible for paying those mechanicals out of what you earn from the sale of the download card (or wrapepd up in the sale of the vinyl). That means you might actually have to pay double the mechanicals on those vinyl sales that come bundled with download cards that are eventually redeemed. Make sense?

    @ChrisRobley

  • Keep in mind, I’m not a lawyer, so this isn’t expert legal advice, but my understanding is:

    The cost/revenue isn’t really a factor. The publisher is owed their 9.1 cents per reproduction (which includes digital reproductions in the form of a download). Also, it’s the location of the retailer that’s important. So, if it was a download from CD Baby, you would be responsible for paying those mechanicals out of what you earn from the sale of the download card (or wrapepd up in the sale of the vinyl). That means you might actually have to pay double the mechanicals on those vinyl sales that come bundled with download cards that are eventually redeemed. Make sense?

    @ChrisRobley

  • Would it be a standalone song? Or is that audio used in the context of one of your original songs? For the former, you’d need to get the mechanical license to distribute the cover song. For the latter, you’d need to get the permission of the songwriter/publisher in order to use their copyrighted material in a new derivative work.

    @ChrisRobley

  • Would it be a standalone song? Or is that audio used in the context of one of your original songs? For the former, you’d need to get the mechanical license to distribute the cover song. For the latter, you’d need to get the permission of the songwriter/publisher in order to use their copyrighted material in a new derivative work.

    @ChrisRobley

  • Freyja

    I recently reinterpreted and recorded a song written by a friend of mine. I’m curious to know if I should use CD baby standard, or if there is any reason to use pro with this song.

  • Freyja

    I recently reinterpreted and recorded a song written by a friend of mine. I’m curious to know if I should use CD baby standard, or if there is any reason to use pro with this song.

  • That all depends on what’s in your contract. Your performance royalties for radio will automatically be split between the publisher (which would be your label if you sign the deal), and the writer (you). However, all the other publishing rights are negotiable, so you’d want to make sure you’re not granting your label EVERYTHING. Seems like you would still want to collect publishing revenue on downloads, CDs, and such (which you WOULD be owed if you retained your publishing rights).

    @ChrisRobley

  • The splits differ depending on the publishing deal you set up. However, have you looked into CD Baby Pro for publishing administration services?

    As for the mechanicals,… did you sign away your publishing rights to your co-written song? Seems to me that you’d still be the publisher for your 50% of the song, even if his half is controlled by Universal.

    @ChrisRobley

  • In the US, the Performing Rights Organizations (BMI, ASCAP, etc.) don’t collect mechanicals, only performance royalties. They DO have reciprocal relationship for performance royalty collection in international territories, but those payments are slooooooow. We have direct deals with collection societies around the world, so we can get artists paid quicker than through reciprocal deals via their PRO. In addition, we also collect those mechanicals.

    @ChrisRobley

  • I’d recommend affiliating as a songwriter (and registering all your songs) with a performing rights organization like ASCAP or BMI. If you’re distributing any of your original songs yourself, you could sign up with CD Baby Pro to handle that affiliation/registration AND to collect mechanical royalties. However, it sounds like the artists you’re writing for might be the ones distributing the music? If so, they (or their labels) would owe you the mechanical royalties for CD sales and download sales in the US. For mechanical royalties from streams or international download sales, you might consider working with a publishing rights administrator who can collect that money for you.

    @ChrisRobley

  • I’d recommend affiliating as a songwriter (and registering all your songs) with a performing rights organization like ASCAP or BMI. If you’re distributing any of your original songs yourself, you could sign up with CD Baby Pro to handle that affiliation/registration AND to collect mechanical royalties. However, it sounds like the artists you’re writing for might be the ones distributing the music? If so, they (or their labels) would owe you the mechanical royalties for CD sales and download sales in the US. For mechanical royalties from streams or international download sales, you might consider working with a publishing rights administrator who can collect that money for you.

    @ChrisRobley

  • Obed Chavarry

    hi ..
    I would like to know if Cdbaby clear the legal aspects if i wanna add a cover song to itunes/spotify???
    and if not…
    can i add… for eg some songs with cdbaby, and some other song with another agregator (with the same artists name) ???

  • NovusCantus

    What is the difference between this, and signing up for Sound Exchange? BTW – we signed up for Sound Exchange at least 3 months ago and have yet to hear anything. Did CDBaby already register us if we published through you as PRO? Thank you!

    • SoundExchange does not collect publishing royalties. They collect a digital performance royalty that gets paid to artists, session players, and labels for the use/creation of the master recording.

      CD Baby Pro does not include SoundExchange registration (since CD Baby Pro deals with collecting publishing royalties). We definitely recommend you sign up for both.

      @ChrisRobley