Understanding mechanical and performance royalties

A song has two main copyrights: the musical composition and the sound recording. Mechanical and performance royalties are both tied to the composition and are generally paid to songwriters and publishers, but they are generated by different uses.

Quick summary:

• Mechanical royalties are generated when a composition is reproduced or distributed, including through downloads, physical copies, and streams.
• Performance royalties are generated when a composition is performed or broadcast publicly, including on radio, television, live stages, and streaming services.
• A single stream can generate more than one royalty type.
• Different organizations collect and pay each royalty type.

What are mechanical royalties?

Mechanical royalties are owed to songwriters and publishers when a composition is reproduced or distributed. Examples include:

• Pressing CDs or vinyl
• Selling permanent digital downloads
• Streaming a song on services such as Spotify or Apple Music

Digital mechanical royalties can include royalties from streams and digital downloads. Other publishing revenue, such as performance royalties and some YouTube publishing revenue, may be reported through different collection channels and should not be treated as the same royalty type.

What are performance royalties?

Performance royalties are paid to songwriters and publishers when a composition is performed or broadcast publicly. Examples include:

• Radio airplay
• Television broadcasts
• Live concert performances
• Background music in restaurants, bars, and stores
• Streams on digital services

Performing rights organizations (PROs), such as ASCAP, BMI, SESAC, SOCAN, and PRS, license these uses and distribute performance royalties according to their rules.

How are performance royalties calculated?

There is no single fixed performance royalty rate. Payments vary based on factors such as:

• The license revenue a PRO collects
• The number and type of performances reported
• Where and how the music was used
• The PRO's distribution rules

Each PRO uses its own formulas and payment schedule.

Why can one stream generate several royalties?

When a listener streams a recording, the service uses both the sound recording and the underlying composition. That use can generate sound-recording revenue as well as mechanical and performance royalties for the composition. Each share may be collected and paid through a different organization.