If you’re looking to make money from your music, you may have already heard of a little thing called royalties. You put out an album and you get paid for granting a license for your music — sounds simple enough, right?
Well, here’s the collective opinion that we’re inclined to agree with: music royalties can be quite confusing. There are multiple layers and players involved before the money ends up in your bank account. But before you go down that rabbit hole, let’s talk about the types of music rights and the royalties you can get from them.
Two General Types of Music Rights
To fully understand the types of royalties, here’s the first thing that you need to remember: every song has two copyrights.
● Composition copyright
Songwriters and music publishers earn royalties by authorizing the use of the composition.
● Recording copyright
Recording artists and record labels earn royalties by authorizing the use of the sound recording
That said, let’s explore the different types of royalties under each subset.
Now let’s move on to different ways you can earn from your music.
1. Mechanical Royalties
Mechanical royalties are given with the use of a composition copyright. Everytime the composition is distributed or reproduced through a sound recording— whether digitally or in physical form — the composer or the songwriter gets paid in royalties.
So, if you’ve written a song, whenever it gets played on any platform, you can earn your mechanical royalty. Based on the federal U.S. Copyright Act Generally, you can earn about $0.09 for every song you have within a purchased physical media (vinyl, CDs, or cassette tapes) and $0.06 for every 100 streams on digital platforms such as Spotify and iTunes.
Fun fact: mechanical royalties got its name because of the way media was produced before. Of course today, this type of revenue is now earned mostly through digital streaming platforms.
2. Public Performance Royalties
As the name suggests, these are royalties that you can collect when your copyrighted song is publicly performed. This specific type of royalty can be distinguished in two ways: royalties generated through streaming platforms and royalties generated on more conventional media. This means that if your music is played on TV, the radio, a restaurant, or a streaming platform such as Spotify, you will be owed public performance royalties.
Let’s start with your royalties generated on conventional platforms. This includes the radio, TV, public venues, restaurants, and other commercial spaces. If any of these broadcasters or establishments want to use your music, they first need to secure a blanket license from performance rights organizations (PROs) like ASCAP, BMI, or SESAC. In return, these organizations will use the money they have collected for your music to give to you as the songwriter and your publishers.
Digital performances (say Pandora or Spotify), on the other hand, is a little more complicated and closely linked to the Mechanical Royalties. Payment for these performances are first made by the streaming service to the PROs. This will then be portioned out to the songwriters and their publishers.
3. Sync Licensing Royalties
Sync royalties are paid out when your music is “synced” to any type of visual media such as advertisements, movie and TV shows, video games, etc.
This type of license usually needs both songwriter copyright and composition copyright. This means that both the owner of the composition and the recording artist get money from sync fees.
Unlike the previous type of royalty, sync licensing does not require the acquisition of a blanket use of your music. This is often a singular deal that gives the license applicant the sole right to the copyrighted music.
4. Neighboring Royalties
Remember Public Performance Royalties and how they are paid for the composition rights of your music? Well, this type of royalty is also for the public performance of your song, except that the money will go to recording artists and their labels. Going back to the two main industry subsets, this means that this secures the recording copyright of the music or song.
5. Print Music Royalties
Finally, we move on to a lesser used type of royalty. These are not quite as common because it is generated through the use of the transcript of your music. For example, you will get royalties for the transcribed musical score of your composition. As you might imagine, this is often given to classical and film score composers.
Another way to earn this type of royalty is when someone purchases your musical score, whether in print or online.
Final words —
Securing licenses and distributing licenses is a very tedious and confusing process. There’s a type of royalty given to every possible context (and the gray areas in between). Plus, as we said, there are multiple players and layers involved before you can actually enjoy your royalties from your music too. And even then, you won’t get full royalties for the music that you put out. Your songwriter (if you are the recording artist), the recording artist (if you are the songwriter), the record label, distributors, licensing agencies, PROs — they all get a cut on the royalties.
So yes, there are multiple ways that you can get royalties from your music. But earning these may not be as straightforward as you might think. Always be prepared because your stream of revenue as an artist can be convoluted, littered by a network of middlemen.