Music royalties

Definition

Every released track contains two copyrights: the composition (melody and lyrics, usually owned by songwriters and publishers) and the sound recording, or master (usually owned by the artist or label).¹ Each copyright earns its own royalties, collected through different channels.²

That is why one stream can end up as payments to a label, an artist, several songwriters, a publisher and a producer, often in different countries.

Types of royalties

• Master royalties: paid for the use of the sound recording, mostly by streaming services through labels and distributors²
• Mechanical royalties: paid to songwriters and publishers for reproducing the composition, including streams and downloads³⁴
• Performance royalties: paid when a composition is played in public, on radio, TV or streaming, collected by collecting societies¹⁴
• Neighboring rights: paid to performers and master owners when recordings are broadcast or played in public.⁵ In the US, SoundExchange collects similar royalties for digital radio, such as satellite and internet radio⁶
• Sync fees: paid for using music in film, TV, ads, games and online videos⁵

From revenue to royalty payout

Royalties flow through a chain: streaming service, distributor or collecting society, label or publisher, and finally the artists and collaborators. When and how much each person is paid depends on their agreements at each step.² Each step can add delay. The last step, paying the people behind the music, is where labels can make the biggest difference in speed.

Further reading

• Compensation for Mechanical Royalties: Paying and Collecting
• Performance Royalties Explained: Who Pays and Collects Them?
• Synchronisation Royalties Explained: Harmonizing Music and Visual Media
• Neighboring Rights, Royalties and Their Collection

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