Reader answer checklist
This guide is structured to answer the practical questions a reader should resolve before relying on the topic.
- Direct answer
- The U.S. interactive-streaming mechanical calculation uses statutory pool and prong comparisons rather than one universal per-stream rate.
- Who this is for
- Songwriters, publishers, managers, and analysts modeling composition income from interactive streaming.
- Practical example
- Use the service's eligible revenue or TCC inputs, apply the applicable prongs, compare the results, and allocate the resulting mechanical pool by ownership.
- Limits and exceptions
- Rates, definitions, reporting data, service categories, periods, and statutory rules change; a model is not a statement reconciliation or guaranteed payout.
- What to do next
- Record the service, period, inputs, ownership shares, and governing Part 385 provision, then compare the model with current statements.
Evidence records
verified- 37 C.F.R. Part 385 — Phonorecords IV — Electronic Code of Federal Regulations · Part 385
Source records identify the evidence to review; they do not replace a claim-by-claim legal review. See the source index for the audit trail.
Editorial record
verified- Last edited
- 2026-07-17
- Reviewed
- 2026-08-07
- Reviewer
- Michael Ruiz
Reviewed by Michael Ruiz on 2026-08-07. Recheck date-sensitive rules and contract terms for a specific matter. See the editorial policy for the review process.
The Interactive Streaming Mechanical Formula
Unlike physical mechanicals (flat per-unit rates), digital interactive streaming mechanical royalties are calculated using complex monthly revenue-sharing matrices governed by 37 C.F.R. Part 385.
The All-In Publishing Pool
First, the DSP (e.g., Spotify) calculates the All-In Publishing Pool. This pool represents the total amount owed for *both* performance and mechanical publishing rights. The All-In Pool is calculated as the greater of two prongs:
1. The Headline Rate Prong: A locked percentage of the service's monthly subscription and ad revenue. Under the Phonorecords IV schedule, the headline percentage is 15.1% for 2023, 15.2% for 2024, 15.25% for 2025, 15.3% for 2026, and 15.35% for 2027. The applicable offering and period control. $$\text{All-In Pool} = \text{Qualifying Service Revenue} \times \text{Applicable Headline Rate}$$
2. The Total Content Cost (TCC) Prong: A percentage of qualifying total content cost defined by the applicable offering. A common 2024 prong is 26.2%, but offering-specific rules, subscriber caps, and bundled-subscription provisions can change the calculation. Do not substitute an assumed percentage of service revenue. $$\text{TCC Prong} = \text{Qualifying Total Content Cost} \times \text{Applicable TCC Percentage}$$
Extracting the Net Mechanical Pool
Because the All-In Pool covers *both* mechanical and performance royalties, the performance royalties collected by PROs (ASCAP/BMI/SESAC) must be subtracted from the All-In Pool to isolate the mechanical royalties:
$$\text{Net Mechanical Pool} = \text{All-In Pool} - \text{Performance Royalties Paid}$$
This isolated Net Mechanical Pool is what the DSP pays to The MLC to be distributed to songwriters and music publishers based on their share of total streams.