BBC - OneMusic How to... - How the money goes (page 1)

So far, we know that the band members will get a share of the profits from the record, but suppose the performers didn't actually write the song? Maybe they did a cover version, or they're the kind of act that doesn't write and uses songwriters to supply them with material?

The band wouldn't be selling records if it wasn't for the writer, so it's reasonable that the writer should get a share of sales income, too.

The way this is done is through what are called Mechanical Royalties, or mechanicals for short. As a writer of a tune, you are entitled to a royalty whenever anyone makes a copy of your music for sale, and this is the mechanical royalty.

Mechanical royalties vary slightly, but they're about 6% of PPD for a major label - about 90p in our example. This is shared between all the writers on the album. They don't get 90p each; the 90p is divided between all of them. For more information on mechanical royalties, see our guide to them.

Normally a writer will have a publisher who will collect mechanicals on their behalf. So the money goes to the publisher first. They will then take about 40% as their commission and pass the rest on to their writer. For more information on publishing, check this link.

But mechanicals don't only apply to writers who don't perform. If the person who wrote the song is a member of the band, they are still entitled to mechanical royalties. And this is in addition to their share of the sales income we described on the previous page.

This can cause major problems within a band, as the one or two writer-members could start to see income from mechanicals while the non-writer members are still paying off their advances and seeing no income from the record. This is where a band agreement can help.