What are music royalties?
Every musician planning to release music should have a basic knowledge of royalties. This basic guide will get you on the road to monetizing your music.
by Lauren Davish of Disc Makers Blog
When working to grow your music career, you quickly learn that music royalties are a legitimate way to generate income. In fact, royalties are sometimes the primary way bands and artists earn a living in the music business. So, what exactly are royalties in music, and how do you make sure you’re getting paid out for all the money your music is generating?
From mechanical to performance royalties, synchronization to public performance royalties, this world can be a little complex, but we’ll break it down so you can be sure you’re fairly compensated for your music.
What are music royalties?
Music royalties are essentially the payout you receive as an artist/band for your work, whether that’s a song, album, performance, or physical media sale. While royalties generated through streaming services are notoriously small, music royalties are also generated through physical sales, digital downloads, radio airplay, and having your music placed in movies, commercials, or TV.
Six different types of music royalties
There are multiple types of music royalties, each determined by the type of copyright with which the music is associated: either the composition or the sound recording. Recording artists should at least be familiar with the differences between a master royalty, mechanical royalty, and streaming royalty. Knowing about each type of royalty is important if you want to make money with music as you can create a variety of income streams and opportunities to expand your career as an artist.
Master recording royalties
Master recording royalties are payments for the recording artist, record label, and producers whenever their recorded song or album is streamed, downloaded, or purchased. These royalties belong to the owner of the master recording rights; in other words, master royalties cover the use of the recorded work itself — not the musical composition, which compensates the songwriters and publishers.
Neighboring rights royalties
Neighboring rights royalties are those generated from public performances or broadcasts of a recorded work, as well as non-interactive digital services, like satellite or internet radio. These royalties also cover when the work is played in a different territory, such as radio or television outside of the US, and are paid out to the owner of the master recording rights.
Public performance royalties
A public performance royalty might not be what you think from its title. Public performance royalties are generated any time your song is played on the radio, in a public setting (e.g., a bar or restaurant), or interactive and non-interactive streaming services, like Spotify or Pandora. These royalties get paid out to both the songwriter and the publisher.
Mechanical royalties
Mechanical royalties are paid out to songwriters, composers, and publishers any time their copyrighted work is reproduced in a digital or physical format. In other words, any time your music is downloaded digitally or purchased physically, you earn royalties as a songwriter.
Digital performance royalties
Digital performance royalties compensate music copyright holders for the digital broadcast of their recorded music. This would include non-interactive digital platforms like Pandora and SiriusXM, but not on-demand streaming services like Spotify. Think, on the internet, but you can’t choose the song on-demand. In the US, digital performance royalties are collected by SoundExchange, a nonprofit performance rights organization.
Synchronization royalties
Also known as sync royalties, these are generated from your music being played in TV shows, movies, and ads (think, music synchronized with visual media). This also includes YouTube videos and video games. These are paid out to the copyright holder of the composition, typically the songwriter or publisher.
Seven steps to register for royalty collection
Registering for your music royalty collection is key to ensuring you are the correct rights holder who will receive the royalty payments. Here are the steps to get started.
- Identity your rights. If you’re not already sure, determine whether you’re entitled to collect performer/producer royalties, composer/songwriter royalties, or both.
- Join a performance rights organization (PRO). These include ASCAP and BMI in the US. PROs collect performance royalties for you as the songwriter/composer whenever your music is played publicly. If you’re an indie, you can likely sign up as the copyright holder and the publisher.
- Register with a mechanical rights agency. Mechanical royalties from digital streams and physical sales are collected by the Mechanical Licensing Collective(MLC) and Harry Fox Agency (HFA) in the US.
- Sign up with SoundExchange. While SoundExchange is technically a PRO, it’s the only organization that collects royalties for non-interactive digital performances (as mentioned, SiriusXM and Pandora are examples of this).
- Consider going with a publishing administrator. Examples include CD Baby’s CDB Boost or TuneCore Publishing. They’ll make sure your music is properly registered across all necessary organizations, though they’ll take a percentage of your royalties. However, often the small percentage they take can be worth ensuring that you’re registered across the board.
- Get to know international collections. You may want to consider affiliating with international collections if your music reaches audiences outside the US.
- Stay up to date on copyright laws. The music industry is always evolving, and so are music copyright laws and royalty rates. Be sure to stay informed about these changes to ensure you’re receiving what your music is worth.
Strategies for maximizing royalty earnings
- Register your music right away. Make sure your music is registered with all relevant collections as soon as it’s released. Delaying your registration can result in lost royalties, so the sooner your music is counted for, the better.
- Get your music heard. Find ways to optimize your music to get discovered by new listeners and increase your plays on streaming services: use promotional tools offered by Spotify and other streaming platforms. More plays mean more royalties.
- Understand your contracts. Be sure to review any contracts you have with labels, publishers, or distributors and understand what percentage of royalties you’re entitled to. Negotiate terms when possible. Know your rights as an artist!
- Leverage sync licensing opportunities. Sync licenses can be very lucrative and can increase your exposure as an artist. Search for opportunities to get your music in TV, films, commercials, and video games.
- Monitor your royalty statements. Review your royalty statements regularly. Keep an eye out for any underpayments or discrepancies and be sure to review them with the respective organizations as needed. You’re in control of your business as a musician.
Lauren Davish is a writer, singer/songwriter, yoga instructor, and voice coach. She received her MA in Creative Writing with a focus on creative nonfiction in 2019. Her favorite types of writing include blog posts and song lyrics.
