How To Collect Mechanical Royalties | Decibel Peak Academy

how to collect performance royalties - decibel peak academy

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In today’s article, we’ll be learning how to collect mechanical royalties for your copyrighted music. Whether you were the composer, performer and/or engineer, you should be entitled to receiving part (if not all) of these mechanical royalties.

Disclaimer: The topic of mechanical royalties is complex and ever-changing. Decibel Peak Academy provides experience-based knowledge, but is not qualified to make decisions on your behalf. Always practice due diligence when dealing with financial and/or legal matters. That being said, you’ll be learning how to maximize the earning potential of your music. It’ll definitely assist you in covering all your bases so if you agree, let’s get started!

Before learning how to collect mechanical royalties, I didn’t even know about them. Most of us are already familiar with performance royalties (if not, you probably missed this article), but you may be entitled to more money than you thought! In the past, mechanical royalties were collected by record labels but nowadays, they can be collected by streaming services and other 3rd party services (like SoundExchange). We’ll be discussing how to collect these royalties in-depth, but you also need to understand WHO these royalties are owed to and WHEN they’re owed. Keep reading to find out!

What is the difference between mechanical royalties and performance royalties?

In short, mechanical royalties are generated when music is being reproduced, but not necessarily being listened to. For example, when CD stores (r.i.p.) ordered x amount of CDs from any given record label, royalties were owed each time a unit was produced.

That’s before anyone had the chance to purchase the CD.

In other words, no one has “interacted” with it yet.

Performance royalties are different because they are owed once a specific piece of music has been chosen to air on public air waves. For example, when someone chooses your song to be placed in their commercial (it’s not random).

It’s the same if someone decided to play your song on Spotify.

However, mechanical royalties can also be generated on streaming services.

Think of it this way… Every time someone plays your track, it’s like a copy is being made. What happens if that copy is made randomly though (like on a radio station)? That’s when it’s comparable to the CD store “stocking it’s shelves”.

That’s when it would fall into the mechanical royalties category.

Does all of this make sense? Here’s another way to put it:

  • Mechanical Royalties = non-interactive (ex.: store shelves)
  • Performance Royalties = interactive (ex.: TV broadcast)

In the past, mechanical royalties were more complicated to collect than performance royalties. It’s much easier in the 21st century since we have access to administration services like SoundExchange and SongTrust.

I definitely recommend registering with SoundExchange since it’s free.

SongTrust isn’t free, but it may pay for itself if you have lots of music playing in foreign countries.

Either way, mechanical royalties don’t collect themselves! Traditionally, it’s been the publishers (record labels) who were responsible for collecting them. Mechanical licensing administrators like the “Harry Fox Agency (HFA)” have also been used.

Music distributors can also collect SOME of these mechanical royalties.

To be honest though, it’s not necessary to worry unless you’ve got lots of music on non-interactive platforms.

For example…

  • Pandora (radio)
  • Sirius XM
  • CD Stores (if they still exist at time of reading)
  • Video Games (not always applicable)

I personally work with SoundExchange and that’s it. Trust me, you’ll know if you need to invest more time and energy into mechanical royalties. The only thing you need to remember is that your PRO doesn’t take care of that for you.

Mechanical royalties vs publishing royalties

To alleviate any confusion, let me start by saying that there’s no difference between mechanical royalties and publishing royalties. We’re actually comparing two entirely different things here.

Rather, it’s better to ask the following question…

Do publishers collect mechanical royalties?

Yes, publishers can collect some of the mechanical royalties generated by any given piece. In most cases, the mechanical royalties are split between the publisher and the writer/composer.

Nowadays, those roles can be occupied by the same person (you).

In other words, if you learn how to publish your own music… You can easily walk away with 100% of your mechanical royalties and potentially 100% of your performance royalties. It just really depends how much of the work you’ve done on your own.

In some cases, you may be working with a music distribution service that charges you 10-15% of those royalties in fees (typical of “free” distribution services).

If you’re working with an actual record label and/or music library, the terms can vary.

If you’re interested in “self-releasing” though, you can start with this article.

Does SOCAN collect mechanical royalties?

Nope. SOCAN doesn’t collect your mechanical royalties, just your performance royalties.

Does BMI collect mechanical royalties?

Since it’s a performing rights organization (PRO), BMI can only collect performance royalties.

Does DistroKid collect mechanical royalties?

DistroKid (like other music distributors) can collect SOME of your mechanical royalties. Think of it like this… Music distributors are basically supplying streaming services with “copies” of your music since they’re like the modern day CD store.

That being said, I still recommend registering with SoundExchange to maximize your earnings!

How to collect mechanical royalties using SoundExchange and SongTrust

I hope you’re starting to understand how to collect mechanical royalties! It’s much more complicated than it sounds because we have access to SoundExchange and SongTrust.

I highly recommend registering your tracks with SoundExchange ASAP.

SongTrust is optional because it only collects mechanical royalties in foreign countries. Unless that applies to you, you won’t necessarily be needing it (especially considering that it’s not free). It can also help you monetize your music on YouTube, but there are many cheaper alternatives for that task (most music distributors include the same service).

You’ll also want to make sure you’re collecting performance royalties by registering with your local performing rights organization (PRO). If you haven’t read my article on collecting performance royalties, I suggest reading that as well.

However, most of you probably ended up here from that article (hopefully)!

If you have any questions or concerns, feel free to leave them in the comments. I can most likely provide you with guidance if you’re struggling, but I can’t take the place of an actual lawyer and/or accountant. Consult as many sources as you can!

If you prefer working with me 1-on-1, you can schedule that here.

Sources

https://www.manatt.com/Manatt/media/Media/PDF/US-Streaming-Royalties-Explained.pdf

https://www.royaltyexchange.com/blog/mechanical-and-performance-royalties-whats-the-difference#sthash.AL63tqdZ.dpbs

https://www.youtube.com/watch?v=m0w9VjDgsQ0

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