Answers/Royalties/What Is a Mechanical Royalty, and Who Pays It?

Royalties

What Is a Mechanical Royalty, and Who Pays It?

By Boboy Watson·Last verified August 31, 2026·2,364 words·Royalties

For about five years I read my DistroKid statement as if it were the whole story. One number per platform, one deposit, done. What I did not understand was that the same stream that generated the line on that statement also generated a second, completely separate payment on the composition — and that payment was going somewhere else entirely, to an organisation I had never opened an account with.

That second payment is the mechanical royalty. This page is about what it is, who owes it, and why it arrives through a different door than everything else you get paid.

What is a mechanical royalty?

A mechanical royalty is the money owed for reproducing a musical composition. It attaches to the song — melody and lyrics — and it is triggered by the act of making a copy, not by the act of playing one.

The name is a nineteenth-century leftover. Mechanical royalties are named after mechanical reproduction: piano rolls, then shellac discs, then vinyl, tape, CD, download, and now the temporary copies a streaming service makes when it delivers audio to a phone. The technology changed completely and the word stayed.

Legally, the mechanical royalty comes from two of the exclusive rights listed in 17 U.S.C. 106 — the right to reproduce the work in copies or phonorecords, and the right to distribute those copies. Whoever exercises those rights on somebody else's composition owes a mechanical. That is the entire concept.

The critical part for an independent artist is that the mechanical is owed on the composition, which means it is owed to the songwriters and their publishers. It is not owed to the artist who performed it, unless the artist also wrote it. In most independent releases you are both people, but the money still arrives through two different systems and you have to be registered in both.

Who pays the mechanical royalty on a stream?

The digital music provider pays it. Spotify, Apple Music, Amazon Music, YouTube Music, Pandora's on-demand tier, Tidal and the rest each pay a mechanical royalty on the compositions they stream, and in the United States they pay it into the Section 115 blanket licence rather than to you.

This surprises people because the recording-side money takes a visibly different path. On the recording side, Spotify pays your distributor, DistroKid or TuneCore or CD Baby, and your distributor pays you. On the composition side, Spotify pays The MLC, and The MLC pays the writers and publishers of the underlying song. Two payments, one stream, two organisations, and only one of them has your bank details unless you went and set the other one up.

Nobody at Spotify decides whether to pay the mechanical. It is compulsory, which is the next part.

What is Section 115 and why does it make mechanicals automatic?

Section 115 of the US Copyright Act is the compulsory mechanical licence. It says that once a musical composition has been distributed to the public in the United States, anyone else may reproduce it without asking, as long as they pay the statutory royalty and follow the procedure. The copyright owner cannot say no.

That single rule explains a lot of the music business. It is why a cover version is legal without a phone call to the original writer. It is why Spotify did not have to negotiate with 200,000 self-releasing artists before launching, and it is why your song generates mechanical income whether or not you know the word "mechanical".

The Music Modernization Act of 2018 rebuilt the digital half of Section 115. Before the MMA, a service had to serve a notice of intention on each individual copyright owner, song by song — a system that collapsed under streaming volume and produced a wave of litigation. The MMA replaced that with a blanket licence covering digital uses by digital music providers, and it created a single designated entity to administer that licence and hold the money. That entity is The MLC, the Mechanical Licensing Collective, which began administering the blanket licence in 2021.

The trade at the centre of the MMA is worth understanding, because it is the trade you personally live inside. Digital services got legal certainty and protection from statutory damages for past unmatched use. Songwriters got a central, funded collective with a public database, free membership, and a duty to try to match usage to owners. What songwriters did not get is an obligation on anyone to find them. The matching runs off a work registration you file. No registration, no match.

How is the streaming mechanical rate set?

The streaming mechanical is not a price per copy. The Copyright Royalty Board sets the rate for interactive streaming as a formula: a percentage of the service's revenue, tested against a percentage of what the service pays to record labels for the recordings, with a floor tied to subscribers. The greater of those calculations becomes the mechanical pool for that service, for that month, and the pool is then divided among rights holders according to usage.

The consequence is the same one that governs the recording side: there is no fixed per-stream mechanical rate in the United States. What gets quoted as a per-stream mechanical is an average computed after the fact by dividing a pool by a stream count. If the service's revenue rises, the pool rises. If total streams on the service rise faster than revenue, the average falls.

Physical and download mechanicals work the opposite way. Those are a penny rate — a fixed number of cents owed per copy manufactured and distributed, set by the Copyright Royalty Board rather than by negotiation, with a higher figure for longer works. A pressing of 500 vinyl records owes a mechanical on 500 copies, calculated at a rate you can look up, and that number does not move with anybody's revenue. Check the current statutory rate at the Copyright Royalty Board or the Harry Fox Agency before you rely on a figure, because it is adjusted on a schedule.

What is the difference between a mechanical royalty and a performance royalty?

This is the distinction that unlocks the whole system, so here it is without hedging.

Both are royalties on the composition. They are paid for different acts, under different sections of the Copyright Act, and collected by different organisations.

Fees stated as of August 2026.

Read the first two rows together. Both rows say "composition", and that is why the two get confused. What differs is the verb. Copying the song is mechanical. Playing the song is performance. A Spotify stream does both at once — it reproduces the composition to deliver it and it publicly performs it — which is exactly why one stream produces two composition royalties collected by two organisations that do not talk to your distributor.

Do physical sales and downloads work differently?

Yes, and the difference matters more than it looks.

The MMA blanket licence administered by The MLC covers digital uses by digital music providers. Physical formats sit outside it. If somebody presses your composition onto a CD, a cassette or a record, that mechanical is not routed through The MLC's blanket licence. It is licensed directly between the licensee and the copyright owner, or through an agency — historically the Harry Fox Agency, which has been issuing mechanical licences since 1927 and whose Songfile product still exists for exactly this purpose.

For a self-releasing artist this splits into two cases, and only one of them costs you anything.

If you press your own CDs of your own songs, you are the copyright owner and the manufacturer at the same time. No mechanical is owed to anyone outside, because you cannot owe yourself a compulsory licence fee. You just make the records.

If you press CDs containing somebody else's song — a cover, a traditional arrangement of a work still in copyright, an interpolation — you owe a mechanical on every copy you manufacture and distribute, at the statutory penny rate, and that is a real bill you should pay before the pressing plant ships. This is the case where the Harry Fox Agency's Songfile service still does the job it was built for, and it is the case most people forget about entirely because their whole mental model of royalties is built around streaming.

DistroKid handles the digital version of this as a paid product, charging $12 a year per cover song for the licence as of August 2026. That covers the digital release. It does not cover a physical run.

Which royalty does my distributor actually collect?

Standard distribution from DistroKid, TuneCore or CD Baby collects the sound recording royalty and nothing else. That is the money Spotify pays for the master. It is not a mechanical.

DistroKid sells DistroKid Publishing as a separate paid add-on, and its help documentation lists what that add-on collects: global digital mechanicals, US offline mechanicals from physical sales, global digital public performance, US offline public performance, worldwide sync income, and settlements. DistroKid frames it explicitly as different from the streaming royalties it already collects for every member. CD Baby sells a comparable publishing product. Songtrust does this as its entire business.

All of those take a percentage. The MLC does not — it is free to join and takes no commission on what it collects, because under the MMA it is funded by the digital services rather than by songwriters.

The decision that follows is simple to state. If you have bought a publishing administration product, it is registering your works and you should not also register the same works yourself, because duplicate claims on one composition create conflicts that freeze the disputed share. If you have not bought one, and your audience is largely in the United States, registering directly with The MLC captures the large majority of the mechanical income that exists, for zero dollars.

When does The MLC actually pay mechanicals out?

The MLC distributes monthly, about 75 days after the end of each monthly usage period. January usage pays around mid-April. February usage pays around mid-May.

The payout minimums for US members are the part worth acting on:

1. ACH direct deposit — $5. Choose this one.
2. Physical check — $100. Twenty times higher for no benefit.
3. Wire transfer — $250.
4. Non-US members: $100 for a local bank transfer or check, $250 by wire.

Selecting ACH rather than a check is the difference between being paid every month and being paid when a small catalogue eventually crawls past $100, which can take years. The money is not lost while it waits — it accrues in your MLC balance — but there is no reason to choose the slow version.

What does a mechanical royalty look like in an actual release?

Take one song you wrote and recorded yourself, released through DistroKid, streamed in the United States on Spotify.

Spotify pays the recording royalty to DistroKid, which pays it to you after its cut. Spotify pays the mechanical on the composition into the Section 115 blanket licence, and The MLC pays it to the registered writer and publisher of that song. Spotify also pays a performance royalty on the composition to ASCAP or BMI, which pays the writer share to you and the publisher share to your publisher entity. If that same recording also gets picked up by a Pandora radio station or SiriusXM, SoundExchange collects the digital performance royalty on the recording under 17 U.S.C. 114.

That is four organisations from one song. The mechanical is the one with no default path to you at all — your distributor will not do it, your PRO will not do it, and SoundExchange is on a different copyright entirely. If you have never registered a work with The MLC, then every US on-demand stream you have ever had has generated a mechanical royalty that went unmatched.

What breaks a mechanical claim?

The mechanical system is a matching system, and matching fails in predictable ways. The most common ones I have run into or had described to me:

1. The work was never registered with The MLC at all, so there is nothing for the usage to match to.
2. Only one co-writer registered, so their share matches and everyone else's sits unclaimed against a partially-registered work.
3. The ISRC on the work registration does not match the ISRC the distributor actually issued, so the reported usage never lands on the work record.
4. Writer shares do not total 100%, which parks the work in a conflict state.
5. The writer registered but never set up a publisher, leaving the publisher half of the composition unclaimed.
6. A publishing administrator registered the work and the writer also registered it directly, creating overlapping claims that freeze payment until somebody resolves them.

Every one of those produces the same symptom: streams are happening, the money is real, and nothing arrives. That is what an unmatched mechanical looks like from the outside.

I am a working artist describing how this has actually run for me, not a lawyer. Statutory rates and licence procedures change — read Section 115 and The MLC's current documentation before you make a decision that depends on them.