Topic 10 of 16
Royalties Explained
The Royalty Landscape
Music royalties are payments made to rights holders when music is used. There are multiple royalty streams, each flowing through different channels. Understanding them ensures you collect everything you're owed.
Royalty Types at a Glance
| Royalty Type | Who Receives It | Collected By |
|---|---|---|
| Master recording / neighboring rights | Recording artist, label | Distributor + SoundExchange (US non-interactive) |
| Performance royalties (composition) | Songwriter, publisher | PRO (ASCAP, BMI, PRS, etc.) |
| Mechanical royalties (composition) | Songwriter, publisher | MLC (US), distributor mechanical admin |
| Sync licensing fee | Songwriter + recording owner | Negotiated directly or through licensing agent |
| Public performance (live) | Venue pays PRO; PRO pays you | PRO |
| Print royalties | Publisher, songwriter | Publisher or directly licensed |
Streaming Royalty Math
Streaming royalties are notoriously low per stream. Here's a rough breakdown of how Spotify calculates payouts:
- Spotify pools all subscription revenue and ad revenue in a given month
- It distributes roughly 70% of that to rights holders, proportionally based on streams
- The average payout is approximately $0.003–$0.005 per stream (varies monthly)
- From that, the distributor takes their cut (if any), and the remainder is split between the master (recording) owner and the publishing/composition owner
- Publishing royalties are further split between the PRO (performance) and MLC (mechanical)
Royalty stacking
A single stream of your song generates royalties from multiple channels. Your distributor pays you for the master. Your PRO pays you for the composition performance. The MLC pays mechanicals. Missing registration in any of these means leaving money uncollected.
SoundExchange (US)
SoundExchange collects digital performance royalties for sound recordings played on non-interactive digital radio — Pandora, satellite radio (SiriusXM), internet radio, and similar services. Unlike PROs, SoundExchange pays the recording artist directly, separate from the label.
- Register free at soundexchange.com
- SoundExchange splits the digital performance royalty: 50% to the label/master owner, 45% directly to the featured artist, 5% to background musicians
Neighboring Rights
In most countries outside the US, when a sound recording is broadcast on radio or publicly performed, the recording artist and label receive "neighboring rights" royalties. The US does not have a general neighboring rights system for traditional radio.
- Collect neighboring rights through your national collection society (PPL in UK, SCPP/SPPF in France, GVL in Germany, etc.)
- If you have international plays, use an agent or aggregator like Recorded Music NZ, PPL, or AARC
Sync Licensing Royalties
Sync placements (TV, film, ads, games) can generate significant one-time fees plus ongoing royalties. A sync license typically involves:
- An upfront sync fee paid to the master owner (you or your label) for the right to use the recording
- A separate master use license fee
- Ongoing performance royalties paid by the broadcaster through PROs when the content airs
Uncleared royalties
Search databases like the Copyright Royalty Board (royaltyrate.org), ASCAP's member portal, and BMI's statement portal regularly. Millions in royalties go unclaimed every year.
This information is provided for educational purposes only and is based on official sources when available. We are not affiliated with any government or legal organization. This is not legal advice.