United States Mechanical Royalty Rates

Release/Manufacture date Cents per song Cents per minute
before July1, 1981 2.75 .5
after July 1, 1981 4 .75
after January 1, 1983 4.25 .8
after July 1, 1984 4.5 .85
after January 1, 1986 5 .95
after January 1, 1988 5.25 1
after January 1, 1990 5.70 1.1
after January 1, 1993 6.25 1.2
after January 1, 1994 6.60 1.25
after January 1, 1996 6.95 1.30
after January 1, 1998 7.1 1.35

Technically: The United States Copyright laws call for Mechanical Royalties to be paid to the copyright owner of each song for each record (this includes all formats and includes promotional copies) manufactured, at the rate per song listed above (as of the date the product was manufactured) or at the rate per minute of running time, whichever is greater. If there is no agreement between the manufacturer (record company) and the copyright holder prior to the manufacture of product, this is what the copyright holder can expect/ demand.

In the real world.... Most Record companies place in their agreements a "Controlled Composition" (those compositions written by the artists signing the record contract, thus being "controlled" by the agreement) clause which modifies all this. A common major label Controlled Composition clause states that "mechanical royalties will be paid at a 3/4 rate on a maximum of 10 songs, regardless of the running time and based on the rate in effect as of the date the project was delivered (or first released.) Recording agreements normally state that Mechanical Royalties are paid on only copies sold (not on those given away for promotional use) or paid on the same number that they pay "record royalties" on.

For songs not contolled by a record contract (covers of other artist's songs) the record company must contract with the copyright holders (publishers.) The Harry Fox Agency out of New York is a clearing house for getting such agreements.