Dance Music Business Resource

Mechanical Royalties

This is the money that must be paid to the owner of the (composition) copyright every time a physical copy is made of any record containing that composition.

That means for every actual piece of vinyl, 8-track or cassette, a certain amount must be paid the copyright owner (usually the composer). Excluding use for broadcast, hence all the specifically marked "promo only" stuff. The artist never gets paid for those copies. Nor do they get money when their (major) label gives bunches of those records to Record and Tape Clubs. They are considered promotional copies, given to those companies as a "reward" for buying a certain amount of another artist.
By US law, this right cannot be assigned to the label ! So usually in a recording contract, the label bargains a lower rate (usually 2/3 or 3/4) that it must pay the composer. Again, this is a lot of paper work, small labels usually just roll this archaic stuff into a decent royalty rate.

The reason I call this archaic, is that it is grown out of an old system where the composer, arranger, performer, and label are very distinct entities.

US

In the US, the Harry Fox Agency is known for collecting and administrating Mechanical Licenses.

UK

Mechanical Copyright Protection Society (MCPS)
http://www.mcps.co.uk/

You will need to obtain a license with MCPS before a UK pressing plant is allowed to proceed with manufacturing.