Types of Music Royalties — How to collect them all!
If you are a music artist, and you write your own songs, you are entitled to 200% of the royalties.
200%?! How is that possible?
This means you are entitled to 100% on each side of the pie. 100% on the artist side (sound recording / master), and the other 100% for the underlying composition (song).
To put this into context, if you were signed to a record label, you would no longer own the master(s), they would. And as part of your agreement with them, they would give you a royalty on sales and streams, as well as an advance, maybe.
If you were signed with a publisher, they would own your song(s). Giving you a % of royalties on the composition side.
Artist Side Royalties
These are the royalties you collect as the person who owns the sound recording / masters. This includes, but is not limited to, the following:
- Interactive steams (Spotify, Apple Music)
- Sales (CDs, downloads, Vinyl etc)
- Non-interactive streams (Pandora)
Songwriter Side Royalties
These are the royalties you collect as the composer and owner of the song. These include:
- Mechanicals
- Performance Royalties
- Non-interactive streams
Performance Royalties
Performing rights organisations issue licences to businesses to use your music. Businesses such as radio stations, shops, bars, live venues, all obtain a blanket license from the PRO in their territory, then the PRO collect and distribute that money to you, the songwriter. In the UK, we have PRS, in the US they have ASCAP, BMI, SESAC, and Global Music Rights.
To collect these royalties, you must either sign up with a PRO in your territory, or you can use your DSPs publishing admin services who will register with the PROs for you. PROs pay songwriter and publishers each their 50% take, so make sure you are getting 100% of that pie if you are your own publisher.
Interactive streams
This refers to streaming services where the user chooses the song they want listen to, such as Spotify, Apple Music, TIDAL, and Amazon. You would collect your royalties from the Digital Service Provider (DSP aka distributor) who you use to distribute your music to the major streaming platforms and stores. Your DSP will also collect money generated from iTunes sales.
Non-interactive streams
This refers to services where the user doesn’t choose the song. Such services as Pandora and Sirius XM, where it functions more like a radio service, as opposed to interactive streams where the user selects the song or album.
In order to collect these royalties, you need to sign up to a collection agency such as SoundExchange who are quite unique as they represent you as the artist (master side), and collect performance royalties for non-interactive streams (Pandora etc).
Publishing Administration Companies
I will mention these types of companies a few times in this article, due to the fact that they can be very useful to you as the songwriter of your music. Publishing administration companies do what they say on the tin, they administer the publishing side of your business. These companies can collect all of the royalties on the composition side, including performance and mechanical royalties. Some DSPs also give you the option to opt-in for their pub admin services, allowing you to collect all royalties on both sides of the pie. This is generally the easiest option.
YouTube Royalties
Youtube’s Content ID system can detect when your work is being used on someone else’s content, and from there you can choose to block the content, or take a share of the ad revenue generated by it.
Many large companies will block it, much to the dismay of many Youtubers. But you don’t have to be so tight, and you shouldn’t be either! When your music is properly protected, you can hugely benefit from people legitimately using your music in their content, not just for the ad revenue, but for the exposure. The easiest way to make sure this is all in place is to opt-in with your DSP.
Facebook Royalties
Yes, you can opt-in to receive royalties when someone uses your music on Facebook. This functions a bit like Youtube’s Content ID system, in the sense that people can easily share your music, and you can monetise their use of it.
Facebook and Instagram Stories now also have “Music Stickers” where users (your fans) can easily add snippets of your music to their content. This is a sign of things to come with regard to Facebook and music, so make sure you’re good to go! I have personally tried to find many indie artist’s I know’s music via Facebook and Instagram stickers, but many of them aren’t there. So you must make sure you opt-in for this, otherwise you are not only making it WAY more difficult for your fans to spread the love, but you will also be leaving money on the table in the future.
More information and what’s going on with Facebook and music. A VERY good read!
Mechanical Royalties
Harry Fox Royalty Rate Checker
On the songwriter side, you are entitled to mechanical royalties whenever your song is streamed, downloaded, or purchased. You can use the above link to check the current royalty rate for mechanicals. These will not be automatically collected by your DSP. You can either opt-in for their publishing administration services or use a 3rd party one to collect those for you.
Further Reading
If you want to be successful in this business, it helps to understand how it works. Here are two books I highly recommend you purchase and keep with you at all times for your reference.
Everything You Need To Know About The Music Business — Donald Passman
How To Make It In The New Music Business — Ari Herstand
[VIDEO] How to collect all music royalties
Christopher Carvalho runs Unlock Your Sound helping up-and-coming indie artists create and strategically release their music.
