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June 30, 2022 • 3 mins read

Music Royalties in Distribution: All you need to know

By Jacque Alec

Do you want to know more about music royalties? You’ve come to the right place. In this guide, we’ll explain what royalties are, the different types, what you should do to get royalties for your music, and what you can expect to get for your work.
Some of the topics we’ll cover in this article are:
  • How royalties are paid out in music distribution
  • What percentage of royalties musicians can expect to receive
  • Different types of royalties
  • How artists are paid for streaming music services
By understanding distribution royalties, artists can make more informed decisions about where their music is being played!
Without further ado, let’s jump in.

What are Music Royalties?

Royalties are a payment made to the owner of a song for the use of that song. The owner of the song can be the composer, lyricist, publisher, or performing artist and royalties are paid out whenever music is used on television, radio, in films, or in live performances. For example, if you hear a song on the radio, the artist who composed that song will receive music royalty.

How Are Royalty Payments Distributed?

There are four main ways that royalties can be distributed:
  • Performance royalties
  • Mechanical royalties
Performance royalties are paid out whenever music is performed publicly. This includes performances on television, radio, or live concerts.
Mechanical royalties, on the other hand, are paid out whenever music is reproduced, such as when a song is downloaded or streamed.
Additionally, there are also sync royalties that refer to the revenue earned from the synchronization or pairing of copyrighted music with visual media.

What Percentage of Royalties Do Musicians Receive?

The percentage of royalties that musicians receive can vary depending on the type of royalty and the music distribution agreement. For example, performance royalties are typically split between the artist and the record label.
In mechanical royalties, the artist typically receives 75% of the royalty, while the record label receives 25%.

What Are The Different Types of Music Royalties?

There are two main types of royalties:
  • Publishing Royalties
  • Recording Royalties
Publishing royalties are paid out to the songwriter or composer whenever a song is used. Recording royalties are paid out to the artist and record label whenever a song is reproduced.

How Are You Paid For Streaming Music Services?

When you stream songs on a music streaming service, you are typically paid a mechanical royalty, but these royalties aren’t as straightforward as mechanical royalties generated from physical products.
The rate that you are paid per stream can vary depending on the music streaming service and it’s usually very hard to calculate. For example, Spotify’s royalty system isn’t based on a fixed rate per stream and depends on how many people listened to music overall, how many played that song, where those users are from and several other factors. That’s why it’s hard to predict how much X streams will get you.
By understanding how royalties work, musicians can make more informed decisions about where to distribute their music. By knowing the different types of royalties and how they are paid out, artists can ensure that they are getting the most from their music distribution agreements!

Are Music Royalties a Good Investment?

Absolutely! Royalties can be a good investment for musicians. They provide a way for artists to make money from their music without having to tour or sell merchandise, especially in the medium and long term.
Additionally, royalties can provide a passive income stream that can help support you during tough economic times.

What Are The Risks of Investing in Music Royalties?

The risks of investing in royalties include the possibility that the song will not be popular and will not generate any royalty payments. Additionally, there is always the risk that the music industry could change and new technologies could make royalties obsolete.
Despite the risks, they can be a good investment for musicians who are looking for a way to generate income from their music.

Conclusion

Royalty payments are a vital part of the music industry, and musicians should understand how they work in order to get the most from their music distribution agreements. By understanding the different types of royalties and how they are paid out, artists can ensure that they are getting the most from their music!
Thanks for reading! I hope this article was helpful. If you enjoyed it, please share it with your friends!
What questions do you still have about royalties in distribution? Let me know in the comments below and I’ll do my best to answer them!
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