What is mechanical royalty? The ‘mechanical royalty’ term was once applied to royalties which were paid whenever a song was reproduced by mechanical means; however, mechanical royalties are now paid for the reproduction of songs in a wide variety of formats: e.g. audiocassette, CDs (Compact Discs), DAT (Digital Audio Tape), flexi-discs, musical greeting cards and other mechanisms which may be sold on a basis of ‘per unit’ sales.

Set by the Copyright Royalty Tribunal, the rate of monies paid by a record label is in accordance with the statutory rate. As of January 1, 2006, and in accordance with the 1997 Mechanical Rate Adjustment Proceeding, the statutory rate of mechanical royalties was listed as 9.1 cents or 1.75 cents per minute of playing time or fraction thereof, whichever is greater. In translation, mechanical royalties on a single recording that airs for three minutes may roughly pay 27 cents per song.

How do mechanical royalties get collected?

The Licensing Division in the Copyright Office initially collects royalty fees from various sources. After deductions are taken for operating costs with regard to royalty fees, the remaining income balance is placed in interest-bearing securities with the US Treasury. These mechanical royalties are then only distributed to copyright owners via Copyright Arbitration Royalty Panels.

Regrettably, new or relatively unknown songwriters may receive only a fraction of the statutory rate from record publishers. In doing so, record companies usually take the lion share of the income. It is best to always have an attorney or other legal consultant review mechanical royalty contracts meticulously to avoid any confusion with regard to the income artists will be receiving.

We hope that this explanation provides sufficient information about mechanical royalties however if you would like to contribute your own article or story about this particular topic, feel free to do so at Media Positive Radio today.