Mechanical Royalties for Streaming Explained
What Are Mechanical Royalties?
Mechanical royalties compensate songwriters and publishers for the reproduction of their musical composition. For streaming, this means each digital reproduction of a song on platforms like Spotify or Apple Music. They are separate from performing rights or master recording royalties.
Who Collects Mechanical Royalties?
Historically, collection was fragmented. In the U.S., the Music Modernization Act (MMA) established The Mechanical Licensing Collective (MLC). The MLC issues a blanket mechanical license to eligible Digital Service Providers (DSPs) for interactive streams. DSPs pay royalties to the MLC, which then identifies and distributes funds to the correct songwriters and publishers. Outside the U.S., various national Collective Management Organizations (CMOs) perform similar functions, ensuring composers and lyricists receive their due for streamed works.
How Mechanical Royalties Are Collected for Streaming Services
Mechanical royalties for streaming services are collected by specific organizations: The Mechanical Licensing Collective (MLC) in the U.S. and various Collective Management Organizations (CMOs) internationally. These entities license digital service providers, collect the due royalties, and then distribute them to the songwriters and publishers of the underlying musical compositions.
