How Do Mechanical Royalties Differ Between Physical and Digital Sales?

Mechanical Royalties From Physical Sales

  • Applies when a song is manufactured onto physical formats like CDs, vinyl, or cassettes.
  • Paid by the record label or manufacturer who presses and distributes the physical copies.
  • Usually paid based on a statutory rate per unit sold (e.g., a fixed amount per CD).
  • The label licenses the song from the publisher and pays the mechanical royalty.


 Mechanical Royalties From Digital Sales and Streaming

  • Applies when songs are downloaded (iTunes, Amazon) or streamed (Spotify, Apple Music).
  • Digital mechanicals are collected by the Mechanical Licensing Collective (The MLC) in the U.S.
  • Streaming platforms pay a mechanical royalty portion per stream, combined with performance royalties.
  • Mechanical rates are often calculated as a fraction of a cent per stream or download.


 Key Differences

Aspect

Physical Sales

Digital Sales/Streaming

Payer

Record label/manufacturer

Streaming services/download stores

Collection Agent

Usually via direct licenses or agencies

The MLC (U.S.), foreign CMOs

Payment Basis

Per unit sold (fixed statutory rate)

Per stream or download (fractional)

Royalty Rate Example

About 9.1 cents per physical unit (U.S.)

Varies; generally lower per unit

Reporting Frequency

Typically monthly or quarterly

Quarterly through The MLC



 Pro Tips

  • Ensure your songs are registered with The MLC for digital mechanicals.
  • Monitor physical sales reports if you’re self-releasing or have a label deal.
  • Keep track of metadata so mechanical royalties are correctly attributed.
  • Understand your publishing deal’s mechanical royalty splits.


Bottom Line:
Mechanical royalties come from both physical and digital reproductions, but the collection, rates, and payers differ significantly. Register with the right agencies to collect mechanicals from all formats and maximize your income.

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