Mechanical & Performance Royalties

Mechanical and performance royalties are two fundamental types of music royalties, but they are generated and collected through different means. Each plays a crucial role in ensuring that songwriters, composers, and publishers are compensated for the use of their music.

Mechanical Royalties

Mechanical royalties are paid to songwriters and publishers when a copy of one of their musical compositions is made, whether physically (like CDs and vinyl) or digitally (including downloads and streams).

How They're Generated:

  • Physical Sales: Royalties are generated whenever a song is reproduced on physical formats such as CDs and vinyl records.
  • Digital Reproduction: Includes digital downloads and streams. Each play on platforms like Spotify or Apple Music is considered a reproduction that generates a mechanical royalty.

How they are collected:

In the United States, mechanical royalties for digital music are collected by the Mechanical Licensing Collective (MLC) and by music publishers or entities like the Harry Fox Agency for physical sales. In other countries, similar agencies or collective management organizations (CMOs) handle these tasks.

 

Performance Royalties

Performance royalties are paid to songwriters, composers, and publishers when music is performed publicly. This includes live performances, as well as broadcasts on radio and television, and streaming over the internet.

How They're Generated:

  • Public Performances: Includes live concerts, music played in restaurants, bars, and other public venues.
  • Broadcasts: Music played over radio and television.
  • Digital Streaming: Unlike mechanical royalties, this pertains to the right to publicly perform the music, not reproduce it.

How they are collected:

Performance royalties are collected by Performing Rights Organizations (PROs) such as ASCAP, BMI, and SESAC in the United States, and similar organizations worldwide. These entities license music on behalf of their members and distribute the collected royalties.

 

Key differences

  • Source of Royalties: Mechanical royalties come from the reproduction of music, whereas performance royalties originate from the public performance or broadcast of music.
  • Legal Basis: They are governed by different sets of legal regulations. Mechanical royalties often have statutory rates in some jurisdictions, while performance royalties are usually negotiated by PROs.
  • Collection Agencies: Different organizations are responsible for collecting these royalties, with mechanical royalties often managed by specialized agencies or publishers, and performance royalties managed by PROs.

Understanding these differences is crucial for artists, songwriters, and music publishers to ensure they are fully compensated for all uses of their work. Each type of royalty represents a vital income stream in the music industry, reflecting different uses and rights associated with musical compositions.

Was this article helpful?
6 out of 8 found this helpful
Have more questions? Submit a request

Comments

0 comments

Article is closed for comments.