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common practice is for cowriters to split all rights 50-50
(or in equal shares if there are more than 2 writers)
You write lyrics, he writes music, it's a 50-50 split.
If you charge a fee, it becomes a work for hire and you waive all share of ownership and all royalties.
Mechanical royalties are paid based on the number of copies of the CD that are manufactured. The music publisher (if you are not under contract to a music publisher, you are your own publisher) is paid 8.5 cents for each copy of the CD containing the song that is manufactured. Whoever wants to manufacture CDs with your song (assuming the songs have never been recorded before) must get a mechanical license from you, granting them the right to manufacture mechanicl reproductions (CDs) of your song.
For example, say you write lyrics for 10 songs that end up on a CD. Someone (your cowriter? a record label?) manufactures 10,000 copies of the CD.
The entity that has these CDs manufactured owes your publisher:
10,000 copies X 10 songs X 8.5 cents statutory rate X .5 (you own half the song) = $4250.
If you are your own music publisher, that money is all yours. If you have a music publisher, you further split it 50 -50 with your publisher.
Note that in the "legitimate" music industry, mechanical royalties usually are capped at 7 songs on a given CD and/or at 75% or another percentage of the statutory rate. If a record label is involved, be aware of this.
You should join a performing rights organization (ASCAP, BMI or SESAC). That is the only way you will ever receive performance royalties (a royalty paid based upon any live or broadcast performances of your song that may happen).
Synchronization royalties (use of the song in film or TV or video games, etc.) is almost always a negotiated flat rate, not a royalty.
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