What Are Mechanical Royalties
Mechanical licenses allows a user to distribute your compositions (songs) physically such as on CD as well as digitally with things such as ringtones, downloads and streams. This license does NOT allow for use in videos however, you'll need a synchronization license for this (more on those soon).
How Do I Collect Them
Well an important step in beginning to collect your mechanical royalties is to first have yourself a publishing company. After establishing that, you'll then want to create a Harry Fox Association Account and register your songs (or Instrumental compositions) with them. If you already have a publishing company registered through your performance rights organization, then you'll have to be sure to only create an account with HFA and NOT to affiliate with them. Doing so will void your pay-out from your respective PRO (having an HFA account does NOT affiliate you, we've provided to link to the appropriate page in order to create an unaffiliated account). The Harry Fox Association takes an 11.5 percent commission. You could also go directly through SONGTRUST if for whatever reason you're unable to join HFA. Songtrust performs the same function as HFA as far as collecting the publisher's share of royalties is concerned but their commission rate is slightly higher at 15%. Their royalty collection spans over 95% of the world, so they're worth it (we've actually opted to use songtrust for royalty collection here at IHQ).
Who Pays Them
The person or label who wishes to use the music must pay the mechanical royalty. There can be several mechanical licenses tied to an album considering the fact that there are often several writers involved. Songwriters are paid mechanical royalties. Payment splits are best handled on the front-end by equally sharing the songwriting credits when the songs are officially first registered. This way the payments are automatically split & distributed.
It is important to note that BMI, ASCAP, SESAC and other Performance Rights Organizations DO NOT collect mechanical royalties on your behalf (scroll up & view part 1 for more info on them). If you're based in the US you must be registered with The Harry Fox Association or SongTrust. If you plan on collecting royalties from other countries, you will have to register with the agencies in those countries.
Performance Royalties (TV/Film/Radio) will Paid to the songwriter &/or composer via ASCAP, BMI or Your Performance Rights Organizations.
Mechanical Royalties (Pandora/Downloads/Streams/etc.) will Paid to your Publisher. So be sure to set up your OWN publishing company & release your OWN music to collect these royalties.
Synchronization (Music paired with visual media: TV Commercials/Movies/YouTube/etc.) is often negotiated and collected up front by the Song writer or Composer.
Print Royalties (when your song or instrumental is translated into sheet music) are paid to the composer and/or song writer.
We understand that this subject matter can be a bit confusing, especially to those Independent Artists who are just starting out. We started this blog mini-series with the intention to help artists like you better understand the different royalty types & collection methods.
Thank You for Reading!