Additionally, if an artist records songs written or owned by someone else, the artist would be responsible for paying mechanical royalties of 7.55 cents per song. It is also very important to understand that most OMDs do not pay any royalties on free downloads of the artist's recordings. The rationale for this is that downloads are promotional in nature. Of course another point of view is that the OMD is receiving free content, without which it could probably not sell advertising. Some OMDs have recently started experimenting with schemes for allocating a small portion of their advertising revenues among artists whose recordings have been downloaded which is a step in the right direction towards compensating artists.
Many contracts also provide that the distributor can hold royalties under a specified amount.
An OMD contract should give the artist a right to object to royalty statements and to examine or audit the OMD's books and records concerning sales of the artist's recordings. The OMD will normally impose limitations on the time period for objections and audits. Time limits for objections are often one year from the date an accounting statement is sent to the artist. An artist-friendly provision that OMDs are unlikely to agree to would specify that the OMD pay a penalty for any substantiated underpayments. Imposing a limitation that requires the artist to hire a certified public accountant to conduct an audit of the OMD's records effectively makes the audit rights useless since the vast majority of artists would be unable to afford to do so.