mechanical royalties are generated from music streams.

When a song is streamed on a digital service provider (DSP) like Spotify or Apple Music, that is considered a "reproduction" of the musical composition. This reproduction is what triggers the payment of a mechanical royalty to the songwriter(s) and their publisher(s).

Here's a breakdown of how it works:

Two Copyrights: Every recorded song has two copyrights:

The Master Recording: The actual audio recording of the song.

The Musical Composition: The underlying melody, lyrics, and harmony of the song.

Mechanical Royalties are for the Composition: Mechanical royalties are paid for the right to reproduce and distribute the musical composition. This applies to physical formats like CDs and vinyl, digital downloads, and, importantly, interactive streams.

How Streaming Generates Mechanical Royalties: When a user chooses to play a specific song on a streaming platform (an "interactive stream"), a mechanical royalty is generated for the songwriter(s) and their publisher. This is in addition to the performance royalty that is also generated by the public performance of the song.

• Collection and Payment: In the United States, a government-created entity called the Mechanical Licensing Collective (The MLC) is responsible for collecting mechanical royalties from digital service providers and paying them to the appropriate songwriters and publishers. Before the establishment of The MLC, this process was more fragmented and complex.