Mechanical royalties are payments made to the owner of the composition copyright every time a copy of a musical composition is made, whether physically or digitally. They are generated each time a musical composition is reproduced, whether physically or digitally via on-demand streaming services. Mechanical royalties are paid to the songwriter and music publisher for the reproduction of copyrighted musical compositions appearing on CDs, cassette tapes, vinyl albums, and other such manufactured formats. The term "mechanical" originates from the time when songs were "mechanically" reproduced in piano rolls and vinyl records.

Mechanical licenses are compulsory within copyright law within the United States. A mechanical license is a license provided by the holder of the copyright of the composition or musical work to another party to cover, reproduce, or sample specific parts of the original composition. The copyright between the composition and the sound recording is frequently held by different parties, so a separate non-mechanical license must be sought from the copyright holder of the sound recording.

Mechanical royalties are paid per song sold, downloaded, and streamed via "on-demand" streaming services. Major music platforms pay mechanical royalties for streams, sales, and downloads to mechanical right collection societies, which then distribute the royalties to the appropriate parties. The current U.S. statutory rate for mechanical royalties, effective through Dec. 31, 2005, is 8.5 cents per song, or 1.65 cents per minute of playing time, whichever is greater.