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Mechanical royalties are payments owed to songwriters and music publishers each time a song is copied and sent out to the public. Every time a song gets pressed onto vinyl, downloaded as an MP3, or streamed on Spotify, someone owes the songwriter a mechanical royalty. It doesn’t matter if the copy is physical or digital.
This isn’t the same as a performance royalty, which pays songwriters every time their music is played in public. Mechanical royalties pay for copying. Performance royalties pay for playing. Two distinct rights. Two distinct income streams. The split matters because many songwriters collect one and miss the other.
In the United States, mechanical royalty rates are set by the Copyright Royalty Board and collected primarily by the Mechanical Licensing Collective (MLC). The current rate is 12.7¢ per track for physical sales and downloads, and 15.25% of service revenue for streaming.
Here's how the system works, what it's worth, and how to make sure you're collecting what you're owed.
A Quick History: Why They're Called "Mechanical" Royalties
The name is a fossil from the player-piano era. In 1906, John Philip Sousa told Congress that "talking machines" would ruin music — his real complaint was that player-piano firms were stamping out rolls of his marches and paying him nothing. His push helped drive the Copyright Act of 1909, which created the first forced mechanical license in American history.
The tech was literally mechanical then: piano rolls punched on paper, sound etched into wax cylinders. The 1909 law covered "instruments serving to reproduce mechanically the musical work," and the name stuck.
Nothing about streaming Spotify is mechanical — no cylinder spins, no paper gets punched — but the legal thread runs straight from Sousa's fight to the royalties flowing through the MLC today. The machines changed. The right did not.
Where Do Mechanical Royalties Come From?
Mechanical royalties kick in every time a song is copied in any format.
Physical Sales
Vinyl records, CDs, and tapes all trigger mechanical royalties. Every unit pressed and shipped means the record label must pay the songwriter at the set rate. The vinyl comeback has kept this slice alive. It’s smaller than before but still exists.
Permanent Digital Downloads
When someone buys a track on iTunes or Amazon Music, that sale triggers a mechanical royalty just as a CD sale would. A download is a copy of the song, just in a different format. The set rate applies the same way.
Interactive Streaming
This is where the real money is now. Every time someone streams a song on Spotify, Apple Music, or Tidal, the platform owes a mechanical royalty to the songwriter and publisher. The streaming rate system is more complex than that for physical sales or downloads, but the core principle is the same: copying triggers payment.
On-demand streaming now accounts for the vast majority of mechanical royalties in the United States. The gap between download and streaming royalties comes down to how the rate is set, not whether one is owed.
Cover Songs and Forced Licenses
Under Section 115 of the Copyright Act, once a song has been recorded and released, anyone else can record their own version without asking. They just have to pay the set mechanical rate.
This forced license is the reason cover songs exist as a legal concept. Johnny Cash could record "Hurt" without Trent Reznor's blessing. He just had to pay the rate.
The forced license was Congress's fix for a monopoly problem. In 1909, the Aeolian Company had locked up exclusive deals with major publishers for player piano rolls. Congress wanted to stop any single firm from cornering the market on recorded music. So they made the license forced: pay the rate, record the song.
Other Sources
Mechanical royalties also apply to ringtones, music boxes, greeting cards, and any other product that copies a song. The ringtone rate is 24 cents per tone. Small slice. Same rule.
How Much Are Mechanical Royalties Worth?
The value of mechanical royalties depends on the format and the rate system that applies. Physical and download rates are simple. Streaming rates aren’t.
Current Rates for Physical Sales and Downloads (2023–2027)
The Copyright Royalty Board (CRB) sets the rate for pressed copies and downloads. Under Phonorecords IV, the rate adjusts each year with the Consumer Price Index:
- 2023: 12.0¢ per track · 2.31¢ per minute
- 2024: 12.4¢ per track · 2.39¢ per minute
- 2025: 12.7¢ per track · 2.45¢ per minute
- 2026: 13.1¢ per track · 2.52¢ per minute
- 2027: TBD (CPI adjustment)
Streaming Rates Under Phonorecords IV
Streaming mechanical royalties work differently. Rather than a flat per-unit rate, the CRB uses a formula based on a share of a streaming service's income. Under Phonorecords IV, the headline rate phases in like this:
- 2023: 15.1% of service revenue
- 2024: 15.2% of service revenue
- 2025: 15.25% of service revenue
- 2026: 15.3% of service revenue
- 2027: 15.35% of service revenue
This is the "all-in" rate for publishing royalties on streaming. Performance royalties paid to PROs (ASCAP, BMI, SESAC) are deducted from this number to determine the actual mechanical payout. The formula also has floors based on per-user minimums and a share of total content costs, whichever gives rights holders the larger number.
How Rates Have Changed Over Time
The first U.S. mechanical royalty rate, set by the Copyright Act of 1909, was 2 cents per copy. That rate held for 67 years, until the Copyright Act of 1976 raised it to 2.75 cents. Since then, physical and download rates have crept up bit by bit — reaching 13.1 cents in 2026 — and the CRB now adjusts them for inflation each year.
Streaming rates jumped sharply under Phonorecords III (2018–2022), when the CRB raised the headline from 10.5% to 15.1%. Streaming services, led by Spotify, fought that increase. They lost. Songwriters received back payments worth hundreds of millions of dollars.
The trend is clear: mechanical royalty rates are rising, and the system for collecting them has never been stronger.
Who Pays Mechanical Royalties — and Who Collects Them?
The mechanical royalty world has two sides: those who owe the money and those who get paid.
Who Pays?
For physical sales and downloads, the record label pays. The label is the one copying and shipping the song, so the duty falls on them. If an artist self-releases, they are their own label and owe the mechanical royalty to whoever controls the song's publishing.
For streaming, the digital service providers (DSPs) pay. Spotify, Apple Music, Amazon Music, Tidal, and others run under blanket mechanical licenses. They pay mechanical royalties directly, either through the MLC's blanket license or through deals cut with publishers.
Who Collects?
Three main groups handle mechanical royalty collection, based on the source and country.
The Mechanical Licensing Collective (MLC)
Created by the Music Modernization Act (MMA) of 2018 and named by the U.S. Copyright Office in 2019, the MLC runs the blanket mechanical license for on-demand streaming and digital downloads in the United States. It collects royalties from DSPs and pays them out to songwriters and publishers.
Since it began in January 2021, the MLC has paid out more than $3 billion in mechanical royalties. It now has more than 68,000 members and a database of over 50 million songs.
The Harry Fox Agency (HFA) and Publishing Administrators
HFA has been licensing and collecting mechanical royalties since 1927. It still handles mechanical licensing for physical products and serves as a key tech partner for the MLC.
Publishing administrators like Songtrust, CD Baby, and TuneCore also collect mechanical royalties for indie songwriters. They sign up works with the MLC and with global collection groups.
Global Mechanical Societies
Outside the United States, mechanical royalties are collected by local rights groups. In the UK, MCPS handles it. In Europe, groups like GEMA (Germany), SACEM (France), and SIAE (Italy) manage mechanical rights. These groups often have deals with each other, forming a worldwide network.
How to Make Sure You're Collecting Your Mechanical Royalties
Millions of dollars in mechanical royalties go unclaimed every year. The reason? Songwriters haven’t signed up with the right groups or haven’t kept their data clean.
Step 1: Register With the MLC
If your music is on any on-demand streaming service in the United States, you should be signed up with the Mechanical Licensing Collective. It’s free. The MLC pays out mechanical royalties each month and has a match rate of nearly 92%. If you have a publisher, they should handle your MLC sign-up. If you’re self-published, sign up at themlc.com.
Step 2: Work With a Publishing Administrator (If You're Independent)
The MLC only covers U.S. on-demand streaming and downloads. It doesn’t collect mechanical royalties from YouTube, TikTok, or Facebook; global mechanical royalties; or physical or sync royalties. A publishing administrator fills those gaps.
Step 3: Keep Your Metadata Clean
Bad metadata is the top reason royalties go unpaid. If your song titles, writer splits, ownership shares, or publisher info are wrong or missing, collection groups cannot match your streams to your account.
Step 4: Don't Confuse Your PRO With Mechanical Collection
ASCAP, BMI, and SESAC collect performance royalties. They don’t collect mechanical royalties. Two systems. Two sign-ups. Don’t assume one covers the other.
Mechanical Royalties as an Asset Class
Investors don’t buy mechanical royalties on their own. They buy publishing royalties, which bundle mechanical, performance, and sync royalties into a single income stream tied to a songwriter's catalog. That combined income stream doesn’t track with the stock market. It doesn’t move with interest rates or GDP. It tracks with whether people keep listening to music.
Mechanical royalties matter to investors because they are the fastest-growing part of that bundle. The CRB keeps raising streaming rates under Phonorecords IV. The MLC keeps improving its match rates and payout speed. As a result, the mechanical share of a catalog's total income keeps climbing.
Summary
Mechanical royalties are payments owed to songwriters and publishers each time a song is copied. They trace back to the Copyright Act of 1909 and the fight over player piano rolls. Today, they come mainly from on-demand streaming, with rates set by the Copyright Royalty Board under the Phonorecords IV framework.
The current rate for pressed copies and downloads is 12.7 cents per track in 2025. Streaming mechanical rates are based on a share of service revenue, which is projected to reach 15.35% by 2027. The Mechanical Licensing Collective has paid out more than $3 billion since it began in 2021.
For songwriters, collecting your mechanical royalties means signing up with the MLC, working with a publishing administrator for global and non-streaming income, and keeping your metadata clean. Don’t count on your PRO for mechanical collection. They don’t handle it.
