How To Collect All Of Your Music Royalties: The Comprehensive Guide
When I first started making music in 2012 as Rosendale, I had no idea what royalties were. In fact, I had no idea how to make money through my music. Thinking back, I can't believe how clueless I was.
Fast forward 8 years: my royalty income has become my biggest source of revenue. While we're all still waiting for the entertainment industry to recover from the effects of the coronavirus pandemic, it's crucial for you to collect the money you are due from your music too!
In doing my own research to figure out how to collect all the different types of royalties for my music, I realized how few resources there are out there to help musicians navigate the process. The US Copyright Office doesn't give much guidance, even though they are the ones assigning legal statutes on copyright royalty rates. Other blogs and websites have outdated and inconsistent information.
I'm so glad that you've stumbled across this website, because my goal is to give you a clear and concise breakdown of all of the types of royalties you can collect and how you can collect them! Keep reading to learn more.
DISCLAIMER: The information and materials available at this web site and at this blog post are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem regarding royalties.
Let's start with the basics:
Royalties are generated from music copyrights.
Every time you finish writing a song, two copyrights are created: one is the composition copyright, and the second is the sound recording copyright. The composition copyright encompasses the notes, melodies, and rhythms that you created in your song. Think about it like this: if you were to write down all of the notes, melodies, and rhythms of every single instrument and vocal part down onto a piece of paper, that would be your composition copyright.
The sound recording copyright encompasses the actual recordings that make up your song. Think about it like this: if you open up your song project file in your digital audio workstation (DAW), all of the instruments and voices you recorded (as WAVs, FLACs, or whatever other audio files) together would comprise your sound recording copyright.
These two copyrights generate a few different types of royalties, listed below.
1. Master Royalties (Streaming Royalties)
You've probably already heard of master royalties (otherwise known as "streaming royalties" to some). These royalties relate to the sound recording copyright. Master royalties are generated every single time someone purchases your music through a digital music store (i.e. iTunes) or streams your music on a streaming platform (i.e. Spotify and Apple Music). Digital service providers pay these royalties using the revenue they collect from user subscriptions (like Spotify Premium users) and advertisers displaying ads on the platform.
Most artists cannot collect these royalties directly from Spotify or Apple. Your record label or digital distributor will collect the royalties for you and pay you when a threshold is met. If you're signed to a record label, your record label will handle the distribution of your music and return your royalties. If you're an independent artist, your digital distributor (such as CDBaby or DistroKid) will distribute your music and collect these royalties for you.
Below is an educational video on how a digital distributor like Spotify pays royalties to artists.
2. Public Performance Royalties
Public performance royalties are collected by performing rights organizations, otherwise known as PROs. The most well known PROs are BMI, ASCAP, and SESAC. Public performance royalties are generated every time your music is played in a retail store, on radio or TV, and anywhere else your music is broadcasted. If you play your own song at a show, you'll be due a public performance royalty as well. Public performance royalties relate to the composition copyright.
To collect these royalties, make sure to sign up with one of the PROs above (you can only sign up with one of them at a time). Your PRO will automatically collect royalties for you from stores, radio, and television. If you perform your own music at shows, make sure to send your PRO a setlist from every single one of your shows so you'll get paid.
These royalties are sometimes split 50/50 between the writer and the publisher of a song. If you are signed to a publisher, you'll likely be splitting these royalties with them. If you are both the writer and the publisher of your own song, you are owed the full amount of the royalty.
3. Digital Performance Royalties
Digital performance royalties are similar to public performance royalties. They also relate to the composition copyright, but are generated only from digital internet radio (i.e. Pandora), satellite radio, and cable radio.
To collect these royalties, sign up with SoundExchange. The royalties are split as follows: rights owners earn 50%, featured artists earn 45%, and non-featured artists earn 5% of every royalty generated. If you own your own recording and are the featured artist on a song, make sure to collect both the rights owner share and the artist share.
4. Mechanical Royalties
Mechanical royalties are royalties generated every time your song is purchased online or streamed on a streaming platform. These royalties are statutory royalties, meaning that they must be paid to musicians under United States law. Mechanical royalty rates are set by the US Copyright Royalty Board. For digital downloads and physical CDs, mechanical royalties have a flat rate of 9.1 cents per copy (for songs that are less than 5 minutes long). For the longer songs, mechanical royalties have a rate of 1.75 cents per minute.
To collect these royalties for downloads and purchases of your music in the United States, sign up with the Mechanical Licensing Collective (also known as "The MLC"). The MLC is a new, non-profit organization set up by the US Copyright Royalty Board under the Music Modernization Act of 2018. Starting 2021, the MLC will deliver past and future mechanical royalties to all of its members. You may sign up regardless of whether or not you are signed to a music publisher - just make sure to select the correct classification of your status when signing up.
To collect these royalties for usage of your music in other countries (where music laws often differ), it may be best to go through a publishing administrator such as SongTrust. Publishing administrators collect your royalties internationally, but keep in mind that they'll take a cut of your royalties in return for the services they provide.
5. Licensing Fees and Royalties
One last form of royalties that I want to discuss in this post are sync licensing fees and royalties. These royalties aren't dictated by the government or generated by any digital service provider. Sync royalties are generated when you sign licensing agreements with another company, musician, television show, or any other third-party who wants to use your music for commercial purposes. Typically, you'll sign an agreement giving the third party permission to use your music in return for an upfront fee (a licensing fee), a royalty depending on the amount of income generated from usage of your music, or both.
It's good to have a licensing agreement template handy so you'll be able to fulfill usage requests quickly. Reaching out to music supervisors and music libraries may give you a better chance of having your music placed in film and television. You might want to consider signing with a sync agent who will pitch your music to sync opportunities for you.
That's about it for all of the royalties you can collect! Laws and music platforms are always changing, so I'll be updating this post with new forms of royalties to collect as they become available. If you think this was a lot to digest, here's a short two-minute video from Spotify explaining several of the royalties that I covered above!
Hope you guys enjoyed this post! Please leave your questions and feedback in the comments below - I'll respond if I can!
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