How Artists Get Paid
In many cases, royalty payments happen once a month, but exactly when and how much artists get paid depends on their agreements with their record label or distributor. Once we pay rightsholders according to their streamshare, the labels and distributors pay artists according to their individual agreements. Spotify has no knowledge of the agreements that artists sign with their labels, so we cant answer why a rightsholders payment comes to a particular amount in a particular month.
How Are Performance Royalties Calculated
Performance Royalties are generated when copyrighted works are performed, recorded, played or streamed in public. This includes radio, television, bars, restaurants, clubs, live concerts, music streaming services, and anywhere else the music plays in public. As I mentioned earlier in the guide, Performance Royalties exist in two parts: Songwriter Royalties, and Publishing Royalties. Both are collected and paid out by your Performing Rights Organization .
How Do Songwriting Royalties Work
There are three ways to earn songwriting royalties. Performance royalties, mechanical royalties, synch fees, and publishing royalties. Mechanical royalties refer to digital downloads at 9.1 cents split between co-writers and publishers. Performance royalties are for live/public/broadcasted performances paid out through Performing Rights Organizations . A sync fee is received by a songwriter when a TV show, ad agency, production house, or company purchases a sync license to use a piece of work to synchronize with video.
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Who Is Being Deprived Of Their Music Royalties
A wide variety of artists and labels have fallen victim, and continue to suffer from this phenomenon. According to the verge, one musician who spoke on condition of anonymity, was owed as much as $40,000 for 70 songs, over the course of a 6-year period.
But more well-known pop stars are not immune. In another article published on hypebot, Katy Perrys song titled Firework was used as a prime example of a track with many people involved in production and distribution.
Image source: Bright Data
This sheer amount of songwriters and publishers in this project almost guarantees that some metadata will be left out and one or more involved parties will suffer losses as a result. The exact dollar amount lost has not been made public and is difficult to calculate, but it is safe to say that streaming services held on to a nice chunk.
When Should I Expect My First Royalty Payments
If you’re affiliating with a Performance Rights Organization for the first time, the earliest you could possibly see royalties is 6 – 9 months after affiliation. Those already affiliated with a Performing Rights Organization at the time of joining CD Baby Pro Publishing Administration should not see any interruption to their existing royalty collection.
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How Are Spotify Royalties Calculated
Royalty calculators are calculated based on a few major factors. These are:
- The type of music streaming platform There are two types of music streaming platforms, and these are on-demand and non-interactive. On-demand is whats more popular nowadays because these are platforms that allow listeners to listen to whatever songs they like and whenever they like. On the other hand, non-interactive platforms are like radio channels or podcasts where the music being played is random and listeners dont get to choose what to hear.
- The music streaming platform Every music streaming platform has its own version of the payout calculator. This is because the platform can include other factors that tie into how much you get paid per stream, such as how popular you are, if you are a paid subscriber, or if the fans listening to your songs are also paid subscribers or not. These are some of the other factors that can determine how much revenue you get from streaming your songs on a platform. In addition, each platform pays differently or has different fees. So, keep in mind that the royalty calculator of a platform, including the Spotify royalties calculator, may calculate a different total than another music streaming platform.
Rate Determination And Illustrative Royalties
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There are three general approaches to assess the applicable royalty rate in the licensing of intellectual property. They are
For a fair evaluation of the royalty rate, the relationship of the parties to the contract should:
- â be at “arms-length”
- â be viewed as acting free and without compulsion
The Cost Approach considers the several elements of cost that may have been entered to create the intellectual property and to seek a royalty rate that will recapture the expense of its development and obtain a return that is commensurate with its expected life. Costs considered could include R& D expenditures, pilot-plant and test-marketing costs, technology upgrading expenses, patent application expenditure and the like.
The method has limited utility since the technology is not priced competitively on “what the market can bear” principles or in the context of the price of similar technologies. More importantly, by lacking optimization , it may earn benefits below its potential.
However, the method may be appropriate when a technology is licensed out during its R& D phase as happens with venture capital investments or it is licensed out during one of the stages of clinical trials of a pharmaceutical.
Comparable market approach
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What Are The Most Popular Streaming Services In 2021
In 2021, the following the are most popular streaming services for listening to music, comedy, and podcasts all around the world:
- Amazon Music
- Sirius XM
According to Statista.com, Apple Music is the most popular streaming platform with 49.5 million users on the platform every month. As a close second place, Spotify has roughly 47.7 million users each month.
The same report noted that Pandora brings in an impressive 35.8 million users, while SoundCloud is a close fourth with 34.2 million monthly users. What is notable here is that SoundCloud is one of the fastest-growing platforms, doubling the number of monthly users from previous years.
Whereas Apple, Spotify, Pandora and SoundCloud are used exclusively for audio streaming, YouTube is extremely popular for streaming music videos, songs, podcasts, and more. Amazingly, YouTube can draw as many as 2 billion monthly users listening to music, watching TV, or going down rabbit holes watching video after video on obscure subjects.
Based On Net Receipts
Methods of calculating royalties changed during the 1980s, due to the rise of retail chain booksellers, which demanded increasing discounts from publishers. As a result, rather than paying royalties based on a percentage of a book’s cover price, publishers preferred to pay royalties based on their net receipts. According to The Writers’ and Artists’ Yearbook of 1984, under the new arrangement, ‘appropriate adjustments are of course made to the royalty figure and the arrangement is of no disadvantage to the author.”
Despite this assurance, in 1991, Frederick Nolan, author and former publishing executive, explained that “net receipts” royalties are often more in the interest of publishers than authors:
In 2003 two American authors Ken Englade and Patricia Simpson sued HarperCollins successfully for selling their work to its foreign affiliates at improperly high discounts
This forced a “class action” readjustment for thousands of authors contracted by HarperCollins between November 1993 and June 1999.
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What Is Metadata In Terms Of Music
Generally speaking, metadata is an additional set of data usually attributed to a song, picture or video in order to enable searchability as well as digital catalogue or archive placement. Some of the most common metadata included in music tracks include:
- Song title
- Bitmap image file
Metadata is crucial for music artists, record label owners, music licensing agencies and other parties who have a vested interest in earning royalties from music broadcasts, and streaming. It is metadata that allows music applications, radio stations, and film editors to identify how many times a track has been played and how much is due to the rights owners.
Can I Use Part Of A Song
Again, theres been a lot of stories that you can use a song as long as you just take a short clip or use sound effects. This again, sadly, isnt true. Even if you just used a few short seconds youre still going to fall under the same copyright restrictions as if you used the whole song. You still need to seek permission from the copyright holders and the original creator or obtain a license to use a song on your YouTube channel, whether its background music for a whole video or a few seconds for effect.
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Samples Medleys And Parodies
BMI accepts for registration works which “sample” other works, provided all parties have agreed to the share percentages on the new work. These shares cannot exceed 200%. The percentages must be noted on the BMI registration form for the work and a copy of the sample license agreement must be provided to BMI upon request.
Standard rates for a popular song will be paid. The same rules apply when two or more works are utilized in a single recording as a medley.
A parody is a satirical imitation of a work. Permission from the owner of the copyright is generally required before commercial exploitation of a parody. BMI will credit the parody based upon the shares authorized by the publisher of the parodied work.
So Is Every Song Copyrighted
So this makes it sound like every song under the sun is copyrighted. While its safest to assume that almost all popular music will be copyrighted, not all music actually is. Some songs may not be subject to copyright if they are:
- Older songs in the public domain
- Songs under creative commons
- Tracks that are royalty-free
All of these offer you the chance to use high-quality music thats not subject to the same copyright laws.
Not sure what any of that meant? Heres a little more information:
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How Much Money Is Paid To A Songwriter In Performance Royalties
The amount of money paid to the songwriter depends on the format the song sells in, how many copies are manufactured, whether the song is performed much in public, how many streams the song gets digitally and whether the songwriter is registered to a music group such as BMI. Royalties, also known as mailbox money, are paid over time, usually quarterly, and can be negotiated for higher rates.
Audio Visual Royalty Calculation
For performances of music in the BMI repertoire that occur on Network, Cable, Local or Digital Service, royalties will be paid according to the following rules: Royalty payments are based upon the license fees that BMI collects from each network, station, or digital service provider. Royalty payment rates will vary from quarter to quarter depending upon the amount of the license fees. In addition, the rates may fluctuate from quarter to quarter depending upon the total performances of music in the BMI repertoire for each quarters Distribution.
For all Audio Visual Sources BMI will calculate and pay royalties for two categories, called the CURRENT ACTIVITY PAYMENT and the SUPER USAGE PAYMENT. The rules for each are as follows:
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Three Things The Top 10 Royalty Earning Songs Of All Time Have In Common
The key to a song generating consistent royalties comes down to one wordâ¦ use. The more a song is used, the more itâs heard and the more chances to earn royalties it receives.
How that use is generated can depend on a number of factors. Most commonly itâs just a factor of sheer popularity. When a popular act releases a hit song, itâs going to generate a lot of plays.
But generally, thatâs a fleeting spike. To put a track into the strata of long-lasting royalty earnings, it typically needs one of the following assists:
Holiday Music: After all, Christmas comes every year, and with it come Christmas parties, Christmas ads, Christmas movies, and many other things Christmas related that provide an excuse to play classic holiday music again.
Soundtracks: When an already popular song is used in an equally popular movie or TV show, it can quickly find itself in a new tier of royalty earnings. Not only does the song get royalties in the airing of the movie or show, its use in either introduces the song to new viewers and listeners, thereby increasing standalone spins after the movie ends.
Just take a look at the top 10 royalty generating songs today. All have one or more of the above factors in play.
What This Guide Will Not Do
I want to take a moment to be clear. Following the steps in this guide is not guaranteed money today, so dont quit your job just yet. These steps, once implemented, just open the pathways for money to stream into your bank accountbut you need to turn on the cash flow with your music. The key to a music income is growing your fanbase slowly and steadily, and with the steps below, you will grow your income as you grow your fanbase. Are you ready?
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Sound Recording Digital Performance Royalties
In the United States, these are just from non-interactive digital streaming services, also known as digital radio. Outside the U.S., these are from radio , TV, jukeboxes, bars, cafes, shops, night clubs, gyms, universities, and anywhere there is a public performance of a recording called digital performance royalties.
How to Get Paid: SoundExchange in the U.S., PPL in the U.K., Re:Sound in Canada, or your countrys neighbouring rights organization.
Which Music Industry Record Needs Fixing
One of the biggest issues the music industry is currently dealing with across the board, is conformity in terms of metadata database entry. Simply put different music platforms enter metadata differently as well as having different fields from one another. This lack of conformity means that more often than not, crucial metadata, such as the royalties owners, get lost when music is uploaded to a given platform.
According to The Verge:
More than 46 million instances of unidentified songwriters or unknown copyright owner Notice of Intents have been digitally filed with the US Copyright Office by streaming services since April 2016.
Unpaid global royalties have reached an estimated $2.5 billion, making it a major source of lost income for artists, music labels, and other intellectual property beneficiaries.
But this is not just an isolated issue on music streaming applications. In fact, according to Digital Music News:
80% of music played commercially is either unreported or misreported.
This includes music played on TV, and over the internet. The latter is becoming an especially potent hotbed for music rights infringements including:
Social media For example, TikTok or videos that are being used for commercial purposes, and/or advertisements
Video sharing For example, or Vimeo clips being produced by SMBs or independent contractors
Web domains For example, a businesss website which includes background music or a photographer or artists portfolio
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Commercial Jingles And Promos Payment
For Commercial Jingles and Promos, payments are calculated based upon the time of day of the performances and the number of performances aired in a given quarter. Please note rates may vary from quarter to quarter depending on the license fees available for distribution and the number of performances eligible for payment.
- 11/19/21: Royalty Payment for 2nd Quarter 2021
- 2/18/22: Royalty Payment for 3rd Quarter 2021
- 5/20/22: Royalty Payment for 4th Quarter 2021
- 8/19/22: Royalty Payment for 1st Quarter 2022
- 11/18/22: Royalty Payment for 2nd Quarter 2022
The Different Types Of Music Copyright
No Tommy Wiseau, we are not kidding. There are actually two types of music copyright and both are important if you want complete control of your music and your music royalties. The two types of copyright for every song consist of the Sound Recording Copyright and the Songwriting Copyright for the actual musical composition itself.
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How Much Do Songwriters Make
So youve decided you love songwriting. Maybe youre wondering how much do songwriters make, and if you can really make a living doing it.
After all, its a tough business. And its not all that clear how the top songwriters became successful. Do they have something you dont? Can you make your own success with the talents and skills you have?
Yes, you can. But first, you have to understand the various streams of income available to songwriters and work to optimize them for yourself.
Songwriting these days is really feast or famine. Thats why we are working so hard to change streaming regulationsto create a middle class in songwriting again.
For example, a typical first publishing deal is about $25-30K for one year. Thats all 1099, so if you can get one of these deals, youll be paying self-employment taxes.
Then, if you get a hit song on the radio, you can make a few hundred thousand dollars, depending on how many songwriters collaborated and the songs genre and reach.
For example, was the song only a hit on country radio or did it cross over into Hot/AC and pop?
Pop hits tend to be much more lucrative. Country radio hits generally earn $75K $250K per writer, but a song with multi-genre radio play can easily translate to $500K per writer.
Its different for everyone, but for me, that feeling of getting my first big check was validating. It told me Im doing the right thing, Im in the right place.