Is it Right to Ask Spotify to Pay Mechanical Royalties When No Copy of the Muisc Was Made? | Vol. 28, No. 1

Mar 2, 2023

Pu-Cheng (Leo) Huang

On-demand interactive streaming on platforms like Spotify, Apple Music, and Amazon Music are increasingly becoming the most popular way for people to consume music.  Consequently, licensing songs to streaming services is proving to be an important revenue source for songwriters.  Traditionally, a songwriter receives mechanical royalties for record sales and downloads as well as public performance royalties when their song gets airplay on radio stations.  Streaming a song on a device raises the question of whether the songwriter gets mechanical or performance royalties.  The music industry standards of practice in the United States stipulate that a stream splits evenly between mechanical and public performance.  But the Music Modernization Act (MMA) did not mandate such an even split.  In fact, digital streaming does not involve reproducing and distributing music where mechanical license is needed.  This paper first explains why the 50-50 split lacks statutory support and then proposes an appropriate fix.