24th August 2017

What Are Mechanical Royalties?

Back To: WTF Is Music Publishing?

Now onto mechanical royalties which in the UK are collected and administered by the Mechanical Copyright Protection Society (MCPS).

Essentially, an MCPS royalty is generated every time your music is reproduced and that’s across all formats, including downloads and streaming.

For example, if a record label wanted to release your record and pressed a thousand CDs and a hundred vinyl, they’d need to pay a license fee for each unit they pressed in order to do so which would go to the songwriters (and their publishers) of the respective songs on said LP.

As emerging artists, your mechanical income will be notably less than your performance income at the start of your career, but when you start shifting units it’ll become a very noteworthy source of income indeed so it’s best to ensure you’re on top of it from the beginning and have your copyrights registered with the MCPS (which is yet another thing we do for you at Sentric – we’re a busy bunch).

Let’s take a look at the income flow for a mechanical royalty generated from a physical CD sale:

Currently, the MCPS rate in this country is 8.5% of the ‘dealer price’. The ‘dealer price’ is the cost per unit the record label sells the CD to the retailer for, not the cost the consumer pays for it at the till.

  • So say Simon Records sells 100 CDs of Pursehouse’s TechnoTime LP to HMV at £5 per unit which generates £500 of revenue
  • 8.5% of that £500 is £42.50 and that’s the mechanical royalty from that transaction.
  • If there are ten tracks on the LP all running at four minutes each then that is divided between them so each track gets £4.25 each.
  • Say track seven on that album was produced by two people, that £4.25 is then split between the two producers and their respective publishers receiving £2.12 (and a half) each.
  • That £2.12 is then split between the publisher and the producer on whatever terms they’ve agreed on (the Sentric service is an 80/20 split, so the artist would get £1.70 and Sentric would get 42p for the registration, administration, collection and distribution of the royalties).

NEXT: Publishing Royalties from Streaming