Mechanical royalties are generated for the copyright holder each time a musical composition is reproduced, physically or digitally.
The term "mechanical royalty" can be traced back to the 1909 Copyright Law when Congress deemed it necessary to pay a music publishing company for the right to reproduce a musical composition on a player-piano roll mechanically. As a result, publishing companies began to issue mechanical licenses.
Since the market has migrated to predominantly digital streaming, this has created a complex process for valuing music and collecting royalty payments. The copyright owner is owed a mechanical royalty when a composition is downloaded from a service like iTunes or played via an interactive streaming service like Apple Music or Spotify. Mechanical royalties are also owed when an artist does a "cover" of the songwriter's composition. The United States government has stepped in to regulate rates for mechanical royalties, setting a price floor of 0.091 cents per digital download. In some cases, these royalties are paid to mechanical agencies on behalf of the copyright owner.
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