Mechanical royalties, or simply mechanicals, are the royalties your song earns from the sale of records. For those of you who don't know what a record is, it's an audio recording, like a CD or cassette tape (or, in ancient times, a black vinyl disc). The record company pays mechanicals for using a copyrighted song on a record. In the United States, the Harry Fox Agency takes care of collecting mechanicals, paying publishers, issuing the licenses, and auditing the record companies every now and then to make sure things are fair and square. For all this, they charge 4.5 percent.

Statutory Rates

In the United States, the federal government has mandated a minimum royalty rate per unit sold that must be paid to the songwriter's publisher by the record company. As of January 2002, mechanicals went up to a whopping eight cents per song for each copy sold. This may not seem like much and, frankly, it's not, but it's a little better than the original two-penny royalty rate that was in effect from 1909 to 1976. That's a long time to go without a raise. To make things worse, the writer only got a penny out of those two cents, with the publisher getting the other half. That's right. You split mechanicals with your publisher.

Mechanicals are different, or sometimes nonexistent, in other countries. Canadian mechanicals are a little lower and the agency that collects in Canada, the CMRRA, charges 5 percent for its services. As of 2002, most Chinese record companies don't pay a dime to anybody in the United States. They just pirate copies of records made by American companies and sell them. The huge differences in mechanicals from place to place will make you wish you had someone in each country to figure it all out.

Well, your wish has been granted: If your songs get played outside the United States, you or your publisher will need to contract with a sub-publisher, called a sub-pub in the biz, in each country where your song is getting exposure. Your sub-pubs collect mechanicals for their respective countries and, after deducting a percentage, pay your publisher. What percentage a sub-pub makes is up for negotiation.

Reduced Rates

Unfortunately, there's still a way to rip songwriters and recording artists off — the controlled composition clause. Even though the law requires a minimum royalty on songs, record companies make most recording artists sign a contract saying that they voluntarily agree to accept less than the legal minimum royalty for songs they write and record. Is this fair? No! Is it legal? Well, nobody seems to be stopping it.

Even worse, labels usually put a ceiling on mechanicals for a project that's far below the statutory rate. This means the artist has a choice of either talking you and your publisher into taking less than the legal minimum royalties for your songs or making up the difference out of his or her own royalties, which were already reduced in the first place. In some cases, the artist can actually end up owing royalties on his or her own record. This is one reason why many recording artists believe that record companies are basically evil. Record companies often push for further reduced rates for compilations, budget priced records, mail order clubs, and “greatest hits” packages. Some record companies will give you full statutory royalties if you sign a publishing deal with their publishing company, which is kind of like hiring a weasel to guard your chickens.