Legal Definitions - mechanical royalty

A mechanical royalty is a payment made to a songwriter each time their song is reproduced on a phonorecord, such as a CD or digital download. These royalty rates are set by law, allowing an artist to record a song without the songwriter's direct permission as long as the statutory rate is paid, though lower rates can be negotiated.

A mechanical royalty is a payment made to a songwriter and their publisher whenever their musical composition is reproduced and distributed to the public. This typically occurs when a song is recorded by an artist (who may or may not be the original songwriter) and then released on a physical product like a CD or vinyl record, or through digital formats such as downloads and streaming services.

The rate for these royalties is often set by law (known as the "statutory rate"), though songwriters and those reproducing the song can negotiate a different rate if they agree. If an artist or record label is willing to pay the statutory rate, they generally do not need to seek direct permission from the songwriter to record and release a cover version of their song; this is known as a compulsory license.

Here are some examples to illustrate how mechanical royalties work:

• Cover Song on a New Album: Imagine a rock band, "The Sonic Waves," decides to record a cover version of a classic 1970s pop song for their upcoming studio album. When their album is released on CDs and vinyl records, "The Sonic Waves" (or their record label) must pay a mechanical royalty to the original songwriter of the 1970s pop song for every physical copy of the album sold. This payment compensates the original songwriter for the reproduction of their musical composition on a new recording.

• Digital Release by an Independent Artist: An independent singer-songwriter, "Maya," records an acoustic rendition of a popular contemporary hit and makes it available for digital download and streaming on various online platforms. For each digital download purchased and each time her cover song is streamed, a mechanical royalty is generated. The digital distributor or streaming service (on behalf of Maya) is responsible for ensuring this royalty is paid to the original songwriter of the contemporary hit, acknowledging the use of their composition in Maya's recording.

• Compilation Album for a Charity Event: A record label compiles a "Songs for Hope" charity album featuring various artists, some of whom contribute new recordings of well-known songs. If one artist records a new version of a famous folk song for this album, the record label must pay mechanical royalties to the original songwriter of that folk song for every copy of the "Songs for Hope" album sold. This ensures the songwriter is compensated for the reproduction of their musical work within the compilation, even if the proceeds from the album sales go to charity.