Copyright & Music Business Announcement – Mechanical Royalty Rate Increases

(01-29-2018) – Today, The Copyright Royalty Board, the body responsible for setting the statutory rates, has increased the U.S. mechanical royalty Rate.  A mechanical license is used to “reproduce and distribute copyrighted musical compositions (songs) on CDs, records, tapes, or permanent digital downloads.” This means that an individual that wishes to manufacture or otherwise sell CDs or downloads of a recorded song requires such a license.  A mechanical license is issued by the owner of the musical composition, generally the music publisher, or through a third-party licensor, such as the Harry Fox Agency.

Today’s announcement marks a milestone as one of the largest increases in recent years. This is a “significant increase in the overall percentage of revenue paid to songwriters from 10.5% to 15.1% over the next five years.” This means that the licensee shall pay royalties under section 115 of the Copyright act in the amount of whichever is greater:

In 2018, 11.4 percent of revenue or 22.0 percent of total content cost.

In 2019, 12.3 percent of revenue or 23.1 percent of total content cost.

In 2020, 13.3 percent of revenue or 24.1 percent of total content cost.

In 2021, 14.2 percent of revenue or 25.2 percent of total content cost.

In 2022, 15.1 percent of revenue or 26.2 percent of total content cost.

Overall, this increase seems to be very beneficial for songwriters.

This article is not intended as legal or business advice, as an attorney or other professional specializing in the field should be consulted.

(c) 2018 The Jacobson, Firm. P.C.

About the author

Justin M. Jacobson, Esq. - Vice-President, The Jacobson Firm, P.C. - Attorney Specializing in Entertainment, Sports, Esports, Fashion and Art Law. In particular, The Jacobson Firm, P.C. handles Trademarks, Copyrights, Contracts, Estate Planning, Music Business and Brand Development on behalf of creative talent and lifestyle brands.

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