When it comes to your music, royalties are the lifeblood of an artist's income. While the intricacies of royalties can seem daunting, the core concepts are actually quite straightforward. This guide aims to provide a detailed explanation of music royalties, breaking down each type and answering common questions artists have about this crucial aspect of the music business.
What Are Music Royalties?
At its essence, a music royalty is a payment made to rights holders for the licensed use of their music. Whenever your music is streamed, downloaded, performed live, played on the radio, or used in TV, film, or commercials, you're entitled to receive royalties.
Types of Music Royalties
There are four main types of music royalties:
- Mechanical Royalties
- Performance Royalties
- Synchronization (Sync) Royalties
- Print Royalties
Let's dive deep into each of these:
Mechanical Royalties
Mechanical royalties are payments made to songwriters and publishers for the reproduction of their musical compositions. This includes:
- Physical reproductions (CDs, vinyl, cassettes)
- Digital downloads
- Streaming
Key points about mechanical royalties
- In the U.S., the mechanical royalty rate is set by the Copyright Royalty Board. As of 2024, the rate is $0.097 per song for physical sales and digital downloads.
- For streaming, the rate is more complex. It's calculated using a formula that considers the service's revenue and total number of streams.
- Mechanical royalties for streaming are typically collected and distributed by your distributor or label.
- For physical sales and downloads, mechanical royalties are often paid by record labels to publishers, who then pay the songwriters.
- Internationally, mechanical royalties are often collected by national mechanical rights societies.
How mechanical royalties work in streaming
- The streaming service pays a total mechanical royalty pool.
- This pool is divided based on the number of streams each song receives.
- The resulting payment is split between the publisher (usually 50%) and the songwriter(s) (50%).
Performance Royalties
Performance royalties are paid when a composition is performed publicly. This includes:
- Radio airplay
- Live performances
- Music played in businesses (restaurants, bars, shops)
- Streaming (yes, streaming generates both mechanical and performance royalties)
- TV and cable broadcasts
Key points about performance royalties
- These are typically collected by Performing Rights Organizations (PROs) like ASCAP, BMI, or SESAC in the U.S., and societies like PRS in the UK or SOCAN in Canada.
- Both songwriters and publishers receive these royalties, typically split 50/50.
- Artists need to register with a PRO to receive these royalties.
- Performance royalties from streaming are collected separately from mechanical royalties.
How performance royalties are calculated
- PROs use complex formulas considering factors like:
- Type of use (radio, live, TV, etc.)
- Audience size or potential audience reach
- Time of day (prime time broadcasts typically pay more)
- Frequency of play
- Featured vs. background use
- Each PRO has its own calculation method, which can make rates vary.
- For live performances, artists typically need to submit setlists to their PRO to receive royalties.
Synchronization (Sync) Royalties
Sync royalties are paid when music is used in combination with visual media. This includes:
- TV shows
- Films
- Commercials
- Video games
- Web content
Key points about sync royalties
- These are typically negotiated directly with the rights holders or through a sync licensing agency.
- Both the songwriter and the master recording owner (usually the label or the artist) receive sync royalties.
- Sync deals often include an upfront fee plus royalties for each use.
- The sync fee can vary widely based on factors like the prominence of the song in the visual media, the popularity of the song/artist, and the budget of the production.
How sync royalties work
- A music supervisor or producer requests to use a song in their visual media.
- They negotiate a sync fee with the publisher (for the composition) and the label/artist (for the master recording).
- An upfront fee is paid for the right to use the song.
- Additional royalties may be paid each time the song is played with the visual media (e.g., TV reruns).
Print Royalties
Print royalties are paid for the licensed use of printed sheet music. While less common in the digital age, they're still relevant for certain genres and uses.
Key points about print royalties
- These apply to sheet music, lyrics, and musical arrangements.
- Typically, they're a percentage of the marked retail price of the sheet music.
- The standard rate is often around 20% of the marked price.
- These are usually collected and distributed by music publishers.
How print royalties work
- A company licenses the right to print and sell sheet music of a song.
- They pay a percentage of each sale to the publisher.
- The publisher then splits this with the songwriter(s) according to their agreement.
How Royalties Work with SOUNDRAW
SOUNDRAW tries to keep things fair and simple when it comes to licensing and royalties. Here's how it works:
If You Distribute Through SOUNDRAW
- SOUNDRAW keeps 10% of the royalties your music earns. This helps cover their costs.
- You get the other 90% of the royalties.
- If you cancel your SOUNDRAW subscription, you'll stop earning new royalties, but you'll still get paid for what you earned before canceling.
If You Don't Distribute Through SOUNDRAW
- You can use other distribution services to get your music out there.
- In this case, SOUNDRAW doesn't take any of your distribution royalties.
- However, because you used SOUNDRAW to create your music, they still have some rights to the song itself.
Ownership of the Songs
- When you create a song using SOUNDRAW, you both own a piece of it.
- You own 50%, and SOUNDRAW owns 50%.
- This means if someone wants to use your song in a movie or TV show, both you and SOUNDRAW would get paid.
Remember, this setup helps SOUNDRAW keep offering their service while making sure you earn money from your music. It's a partnership where both sides benefit.
Ready to start making royalty-free music with our AI music generator?
Common Questions Artists Have About Royalties
Q1: Do I need to register my songs to receive royalties?
A: Yes, you should register your songs with:
- The U.S. Copyright Office
- Your chosen PRO (ASCAP, BMI, or SESAC)
- Your publisher or publishing administrator
Q2: How long does it take to receive royalties?
A: It can take anywhere from 3 months to 2 years, depending on the type of royalty and the organization collecting it. Streaming mechanical royalties are typically the fastest, while performance royalties can take longer.
Q3: What's the difference between songwriter royalties and artist royalties?
A: Songwriter royalties are paid for the use of the composition (the song itself), while artist royalties are paid for the use of a specific recording of that song. As a recording artist, you might receive both if you wrote the song you performed.
Q4: Do I need a publisher to collect royalties?
A: Not necessarily, but having a publisher or using a publishing administration service can help ensure you're collecting all the royalties you're owed, especially internationally.
Q5: How do international royalties work?
A: If your music is used internationally, you can collect royalties through reciprocal agreements between PROs in different countries. Having a publisher can be particularly helpful for collecting international royalties.
Q6: What's the difference between royalties and licensing fees?
A: Licensing fees are typically one-time payments for the right to use a piece of music, while royalties are ongoing payments based on the actual use of the music.
Q7: How have streaming services impacted royalties?
A: Streaming has significantly changed the royalty landscape. While it's opened up global distribution for many artists, the per-stream rates are much lower than traditional sales. However, the volume of streams can potentially make up for this over time.
Q8: Can I collect royalties for covers of my songs?
A: Yes, as the songwriter, you're entitled to mechanical and performance royalties when others cover your songs.
Understanding these different types of royalties and how they work is crucial for artists looking to maximize their income from their music. While the system can be complex, breaking it down into these categories makes it more manageable. Remember, staying informed about changes in the industry and regularly reviewing your royalty statements can help you make the most of your music career.