But the real answer is… music publishing!
There’re 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 you’ll earn as a songwriter is performance royalties. But an even bigger revenue stream (at least for the music publishing industry at large) is mechanical royalties, which we’ll talk about in this article.
Mechanical royalties and independent songwriters
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 Rdio, you are owed a mechanical royalty.
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, regardless of whether those albums or singles are sold. (The mechanical royalty rate for on-demand streams through services like Spotify and Rdio is far lower; and yes — those services owe you both a mechanical royalty AND a performance royalty for your music’s usage). 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.
BUT 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), 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.