Music Royalties are one of your main income if you’re a musician. But understanding how to collect them can be confusing. That’s why we’re here to help 🙂 And if you’re studying IP Law and want to specialize in the music Industry, we’re gonna sum up 90% of the things you need to know down there, so hold tight, we’re getting intense!
1. What Are Music Royalties?
Every music creator gets annual music royalties for each use of their work. There are many types of royalties. Anytime someone listens to your music on Spotify or Pandora, watches a live music performance or does a cover on one of your songs, the original creator is paid. They receive a share whenever the services are performed.
| Check out: Music Rights and how do they work?
2. Main Types of Music Royalties
There are two main types of royalties every artist should be aware of: Performance Royalties (PR) and Mechanical Royalties (MR).
Performance Royalties
These are earned every time your song is performed in public. Be aware that Public performances don’t just mean live concerts, though, they include things like:
- Streaming services
- Radio plays
- Television broadcasts
- Live performances
- Even concerts by other artists
PR are collected by Performance Rights Organizations (PROs). In the US, these are ASCAP, BMI and SESAC. When your song is played, these organizations collect royalties and send them to you. However, your streaming platform doesn’t handle these payments directly. It’s the PRO that will ensure you get paid.
Mechanical Royalties
These are earned whenever your song is reproduced, either physically (like on CDs or vinyl) or digitally (like through streaming). Whenever a digital copy of your song is created, like when someone streams it, a mechanical royalty is generated.
In the US, MR are collected by the Mechanical Licensing Collective (MLC). These royalties are paid to the songwriter and publisher of the song.
| Read also: How to copyright a song
Streaming Royalties (SR)
As obvious as it sounds, they are generated every time someone streams your song. But, it’s not as straightforward as you might think. Cause what you need to know is that Spotify (for example) doesn’t pay you directly. They pay your distributor, then your distributor pays you your part of the royalties. But, these streaming pay only pay a part of the royalties you’re owed. They don’t pay the songwriter directly. Those are handled by PROs like ASCAP. So, even if your distributor is paying you for streams, you could still be missing out on songwriting royalties if you’re not registered with a PRO.
Neighboring Rights — What You Need to Know
Neighboring Rights can get a bit more complicated, so here’s a basic rundown:
These are performance royalties that are generated outside your home country. To collect them, your country must be a signatory of the Rome Convention of 1961. The US didn’t sign the Convention. So, if you’re American and your music is played abroad, you’ll need to research and register in those countries to collect your royalties. Services like SongTrust can help you collect these globally.
Non Interactive Streaming Royalties
This is a category of royalties that many artists forget about. These are collected by SoundExchange and are generated when your song is played on services like Pandora, Sirius XM or web radio stations. Unlike Spotify, where listeners choose the specific songs they want to hear, these non-interactive services play curated music based on genres or stations. SoundExchange handles the royalties for these types of digital performances. Digital Performance Rights don’t involve songwriters or publishers. 50% of the royalties are paid to the Right’s Owner (the owner of the master record) 45% goes to the featured artist and the other goes to non-featured artists (like musicians for example).
| Check out: A clear guide to avoid underselling your music
To Conclude
To make sure you’re collecting everything you’re owed, register with the appropriate organizations like your PRO, MLC and SoundExchange. If you have an international fan base, don’t forget about neighboring rights. Services like SongTrust can help make sure you’re collecting all your royalties from over 200 counties!
Don’t neglect your royalties! By managing them, you’re getting paid for every stream, play and performance. 🙂
—
Connect with hundreds of industry professionals 👇