Mechanical royalties are collected from digital music services such as Spotify and other streaming services. These royalties are paid to songwriters, composers, and publishers for the reproduction of musical works. For example, when a user streams a song on Spotify, the streaming service pays mechanical royalties to the songwriter, composer and publisher.
The exact amount of mechanical royalties paid varies based on the terms of the licenses that are negotiated between Spotify and the labels or publishers that own the rights to the songs being streamed. Generally, the rate is based on a percentage of Spotify’s revenues from streaming that particular track.
In addition to paying mechanical royalties to songwriters and publishers, Spotify also pays performance royalties which are collected by collection societies such as ASCAP and BMI in some countries. Performance royalties are paid for each play of a song on an interactive streaming service such as Spotify, Pandora or Apple Music. They are paid out to both songwriters/composers and publishers who have ownership rights in a particular sound recording.
When it comes to collecting mechanical royalties from Spotify, it is typically handled by either labels or publishing companies that own the master recordings or publishing rights for a particular track. The labels or publishing companies then distribute these mechanical royalty payments amongst their writers (songwriters/composers) and publishers who have ownership rights in a particular track.
In some countries like Germany, Sweden, Norway and Australia there are collective management organizations (CMOs) like GEMA and STIM which collect mechanical royalties from digital services like Spotify on behalf of their members (i.e., songwriters/composers) who own copyrights in a particular track.
Overall, labels or publishing companies handle collecting mechanical royalty payments from Spotify while CMOs handle collecting these payments in certain countries where they exist. Both labels/publishing companies and CMOs then distribute these payments amongst their members who have ownership rights in a particular track.
Conclusion
In conclusion, labels or publishing companies collect mechanical royalty payments from digital music services like Spotify while CMOs collect these payments in certain countries where they exist for their members who have ownership rights in a particular track.