How Mechanical Royalties Work

Mechanical royalties in a nutshell are royalties that the record company pays for the right to use a song in records.  The publisher issues a license to the record company that says, for each record manufactured and distributed, each digital copy that's downloaded, the record company will pay a royalty equal to a specified number of pennies.  Sometimes this rate is tied to the statutory rate, and thus increases if the statutory royalty increases. 

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