Why do Record Labels need to account Mechanicals?
So, what is a Mechanical Royalty?
Whenever a song is reproduced a royalty called a Mechanical is due to the associated songwriters for every reproduction. The process is different depending on the format and the territory of the reproduction.
Generally, for physical products, the labels report to the collection societies how many units they have manufactured or sold & pay the necessary fee. Whilst generally for digital downloads & streams, it are the DSPs that report to the societies how many times a song has been downloaded or listened to via their platform and pay the necessary fee. The collection societies then report this to the publishers who in turn pay the applicable songwriters and composers.
There are a few exceptions to this on a territory basis. For example, in the US, the download stores pass the mechanical royalty back to the master rights owner who is then obliged to report to the necessary publisher(s).
Which mechanical liabilities does a record label need to conform with?
In essence, when there is no mechanical society part of the value chain that makes sure publishers and composers are remunerated for every reproduction, then this responsibility falls with the label. A label which is audited and found not to have paid due mechanicals risks being fined.
As a record label, if you manufacture a physical product, you will need to conform with the rules of your local mechanical collection society. Each society has their own rules, but generally you will be invoiced by the society for every physical copy that is either manufactured or sold.
As mentioned, when you distribute your music digitally, a network of societies are in place globally to pass these mechanical royalties straight from the DSPs to the publishers. But there are exceptions, most notably the United States. Whilst the MLC collects and distributes mechanical royalties for streams, there is no network in place to collect and distribute mechanical royalties for digital downloads. If you as a record label provide your music on digital download platforms in the United States, you need to make sure a mechanical royalty is paid to the applicable publisher for every download unit.
How can Curve make Mechanical reporting less, well, mechanical?
Curve makes managing your mechanical reporting easy. It can be used to calculate royalties due from downloads in the United States, royalties due from manufacturing of physical products and AP1 reporting for MCPS in the UK. Want to know more? Take a tour here, find out why Curve is the royalty management choice for record labels across the globe.
