Mechanical royalties are paid when a song is reproduced — historically through vinyl, cassettes, and CDs, but today also through digital downloads and interactive streams (e.g., Spotify, Apple Music). In the US, these royalties are collected by The Mechanical License Collective (MLC) and then paid to the publisher (key point: if you are an independent artist without a publisher, you can register as your own publisher so that you don’t miss out on mechanical royalties!).
Performance royalties are earned when a song is publicly performed or broadcast. This includes radio airplay, live performances, TV shows, music played in restaurants or stores, and non-interactive streams (like Pandora’s free tier). These are collected by Performing Rights Organizations (PROs) such as ASCAP, BMI, SESAC, and GMR, which distribute payments to songwriters and publishers.
Example: When a song is streamed on Spotify, the platform pays mechanical royalties for reproducing the track and performance royalties for making it publicly accessible to listeners.