2017 United States Download and CD Royalty Rates

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By Todd Brabec & Jeffrey Brabec

Currently there are proceedings before the Copyright Royalty Board (the “CRB”) which will determine what the statutory mechanical rates for downloads and physical sales will be for songwriters and music publishers  for the five (5) year period beginning January 1, 2018 through December 31, 2022.

These new rates are scheduled to be established by December 15, 2017.

In the meantime, below are the effective rates for 2017.

Digital Downloads:  The songwriter / publisher statutory rate for permanent digital downloads is 9.1¢ (with 1.75¢ per minute for songs over 5 minutes).

There are certain exceptions to the rule that songwriters and publishers will receive a 100% non-reduced statutory mechanical rate for each digital sale, but, in almost all cases, statutory will be the rule.

CD/Vinyl/Physical Product:  The mechanical CD and other physical recording royalty rate is 9.1¢ per composition (sometimes called the “minimum statutory rate) or 1.75¢ per minute for songs over 5 minutes (the latter timing royalty being sometimes referred to as the "long song" rate).

This royalty rate (which is identical to the digital rate) applies unless the music publisher and songwriter agree to a lesser rate in the mechanical license or controlled composition clause of the recording artist or producer agreement (e.g., 75% statutory, 87.5 % statutory, 75% with escalations based on the album achieving certain sales plateaus, etc.).

These physical product rates may be further reduced by royalty caps placed on an album by the record company (e.g., total album mechanicals being based on a10 song cap, 12 song cap, etc.) and the number of non-artist or non-producer written songs on an album.  As stated previously, with few exceptions, these reduced rates only apply to physical products and not to digital distribution.

These monies are paid by the record company to the music publisher, which then pays the songwriter his or her share of the royalties per the terms of the songwriter, co-publishing or administration agreement (e.g., 50%, 75%, 85%, etc.).

These rates only apply to the United States and not to sales in other countries.  Other countries have their own mechanical rate structures which, in most cases, do not allow the reduced mechanical royalty rates for compositions written by the recording artist or producer which may have been agreed to in the U.S. recording artist or producer agreement.

© 2015 Jeff Brabec, Todd Brabec

This article is based on information contained in the new, revised 7th edition of the book "Music, Money, And Success: The Insider's Guide To Making Money In The Music Business" written by Jeffrey Brabec and Todd Brabec (Published by Schirmer Trade Books/Music Sales).  See also www.musicandmoney.com.