Companies limit mechanical royalties when making your own music. Here are two specific ways they are controlled.
1. Rate Per Song
In 1976 the Copyright Act raised the statutory rate from 2 cents to almost 3 cents when the record companies hit upon the idea that they should require their artists to license controlled compositions at 75% of the statutory rate, with further reductions to 50% for record club or budget records. The controlled clause existed before 1976 Copyright Act, but they didn't reduce the rate below statutory. To a large degree, the companies have been successful in getting these 75% and 50% rates with almost all new, and many midlevel artists. Even the biggest superstars have some form of controlled composition clause, although the limit may be 100% of statutory.
2. Rate Per Album
There is also a limit of ten or so times the single song rate for each album. Next post I will discuss Maximum rate per song.
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