Music Streaming Royalty Rates
Spotify now provides streaming services to over 248 million paid monthly users. 2019s most-played artist, Post Malone, boasted over 6.5 billion streams this year alone. Spotify also announced in May that they were increasing their pay-per-play rate to $0.00437 . To put this into context, 100,000 plays on Spotify generates a total of £330 in royalties.
Many of this years most-streamed songs were created by UK songwriters and composers. This is reflected in figures provided by PPL. They reported a 17% increase in royalty income from digital platforms in 2019, to a total of £145.7m.
Digital streamings generate both mechanical and performance royalties. These royalties will be shared amongst the contributors to the song. The percentage share, however, depends on how the song has been used. If the song is played on a streaming service, royalties are split evenly across mechanical and performance royalties. However, if the song has been permanently downloaded, 75% of the funds are allocated to mechanical royalties.
Who Distributes Music Royalties
If you want to collect royalties then you need to sign up with a collection society. For songwriters, this will be PRS for Music. This is a UK organisation that collects revenue that you are owed for uses of your songs and is the best way to collect your royalties. PRS for Music collects and distributes royalties on behalf of the songwriter/composer. This is perfect if you write your own music!
PRS for Music includes two separate collecting societies, PRS and MCPS that operate together. Musical works that are performed or play get their royalties collected and distributed by PRS. MCPS collects and distributes royalties for musical works that have been reproduced or copied.
The Phonographic Performance Ltd society is another way in which you can collect royalties. This company collects royalties on behalf of performers and record labels.
PPL does a very similar job as the PRS. However, they specifically license the use of recorded music to be played in public, radio, TV or the internet. You will have to register each of your tracks on the website for free in order to collect royalties.
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.
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What Royalties Do You Collect In Addition To What The Pros/performing Rights Societies Collect
The following information is regarding TuneCore’s Publishing Administration service
There are multiple royalties not collected by your local PRO including Mechanical, Print, Sync and Micro-Sync. If you are US-based, the mechanical royalties due from streams, downloads, and physical sales are not collected by performance societies like ASCAP, BMI, or SESAC. For many songwriters nowadays, this makes up the majority of their publishing income. The publishers share of your performance income may also not be paid by your local PRO despite it being collected. Some examples of this revenue include:
- Interactive streaming
- Digital Downloads
- Physical product such as vinyl, CDs and cassettes
- Ringtones / ringbacks available from AT& T, T Mobile
- Cover versions of your songs
- Greeting Cards
- On demand jukebox
- Physical and digital sheet music
- Lyric reprints physical such as liner notes
- Lyric reprints digital such as on Spotify or on MusixMatch/Instagram
- Guitar tablature
- DVD/Blu Ray
YouTube, Tik Tok etc It is very important to note that a micro-sync revenue on a platform such as YouTube generates both mechanical and performance royalties.
- Interactive streaming
- Internet radio
- Satellite radio/non-interactive streaming
- Retail outlets
- Small businesses
Some further notes on collections:
Affiliate Yourself With A Collection Society For Performance Royalties
Performance Rights Organization, or PROs, are societies that collect royalties on behalf of songwriters and music publishers when their music is publicly broadcast or performed . ASCAP and BMI are the major U.S. PROs, each representing and collecting on behalf of hundreds of thousands of songwriters, composers, and music publishers. Similarly, Collective Management Organizations, or CMOs, are organizations that track and collect both performance and mechanical royalties on behalf of copyright owners globally. Mechanical royalties are earned when a song is physically or digitally reproduced. Examples of CMOs across the world include SUISA, for Swiss songwriters, composers, and music publishers PRS, for UK songwriters, composers, and music publishers and GEMA, for German songwriters, composers, and music publishers. Registering with a PRO or CMO is the first step that songwriters need to take to collect their global publishing royalties. When you join a PRO or CMO, you will be assigned an IPI, a unique identifier used at global royalty sources to identify your works.
For a deeper dive into performance royalties, check out this article.
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But How Do You Invest In Royalties
Many people would wonder how it is possible to earn from royalties of something that is not originally yours. Well, this is possible.
For example, even if you have never written a song, you can still invest in a song and start earning some money.
There are numerous instances when artists who own royalties for a certain song or asset may need quick money.
This may be because they want to purchase a house, a car, or even grow another business.
Therefore, instead of waiting for the regular royalty payments, they opt to sell their rights to get the money they require to cater to their needs.
Investors are therefore free to purchase a certain percentage of the said royalties and start earning. If you are looking for a stable passive income stream, you can then invest in these music royalties.
Streaming Revenue From Your Sound Recordings
What are streaming royalties?
This is money youre owed whenever your recordings whether youre the label, the artist, or both are streamed on platforms like Spotify, Apple Music, or Deezer. This royalty is sometimes called the streaming license fee.
How to collect streaming revenue?
With CD Baby as your distributor, well deliver your music to all the important digital platforms, collect the money youre owed, and add it to your account with detailed reports on your streaming activity across all platforms.
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Types Of Music Royalties How To Collect Them All
If you are a music artist, and you write your own songs, you are entitled to 200% of the royalties.
200%?! How is that possible?
This means you are entitled to 100% on each side of the pie. 100% on the artist side , and the other 100% for the underlying composition .
To put this into context, if you were signed to a record label, you would hand over your master to them to exploit commercially. And as part of your agreement with them, they would give you a royalty on sales and streams.
If you were signed with a publisher, they would own your song. Giving you a % of royalties on the composition side.
You can also download a FREE PDF version of this guide so you always have it to hand!
Is There One Service That Can Collect All Of My Royalties
Todd: Getting back to John Clarks original question about having one streamlined service to register all of your rights, and make sure youre collecting everything. I think we can both say that it probably doesnt exist or we havent seen it. But there is an effort being made by a lot of the digital distribution companies because theyre sort of the first point of contact.
They give you these extra check boxes. A lot of the digital distributors will have tick this box if you want us to collect your YouTube micro sync royalties, or Check this box if you want to sign up for our publishing collection service. And, you know, theres an effort being made to sort of streamline all these.
But I havent seen one yet that offers a tick box for neighbouring rights, and specifically neighbouring rights for both the performer and the rights owner. So even with that effort being made I still think theres probably other services that you need to sign up for.
Paul: So I have seen on the Rights Owner side of Neighbouring Rights that some digital distributors will collect for you. At least from my understanding.
Todd: Okay, cool.Paul: Yeah, so theyre collecting on behalf of the label the rights owner. And you know, Ive seen The Orchard do a pretty good job of it. And Ive seen them do the international part too.
Todd: Also Paul, from memory, its been a long time since I signed up for SoundExchange, but I dont recall having to submit a master list of metadata, or am I mistaken?
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Is There One Service That Will Collect All Of My Music Royalties
Todd: So how do artists ensure they are collecting all of the royalties theyre due? And really, this has two questions in it. To collect all of your royalties, you have to know about the various types. So were going to help you learn about those. And theres also going to be a few you probably didnt know about.
So lets get into this. And by the end, well have a good overview of the royalty types and how you can collect them.
Paul: Right, so you had sent me a question from someone saying, like Im registered with several different collection services, but I feel like Im missing money. And they went on to say Its difficult to register for all these services, one streamlined process would be amazing. Does that exist?
So that thats from John Clark, and, yes, I agree with him. It would be amazing if there was just one place to go to get all the royalties and not have to navigate all the different places.
What were going to try to do right now is just give a macro view of where should artists go and what sources of royalties should they be collecting for?
So the first and, when people do research they see that theres usually two or three different types.
Here is a List of PROs around the World. Choose one in your home country.
So, youve written a song, youve released it, youre going to get performance royalties from your PRO, and master royalties from your digital distributor.
How To Collect Music Royalties In 2021
With live performances not even a consideration for most, collecting royalties has never been more essential. The problem is that the lines have gone from blurry to nearly invisible when defining how and when artists should collect certain royalties. With how complex it can be to collect the maximum amount on your own, here is a crash course on collecting music royalties in 2021.
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Do Streaming Services Pay Mechanical Royalties
The term mechanical dates back to when music was sold primarily on physical music formats piano rolls in the early twentieth century, then vinyl, cassette tapes, and CDs. But mechanical royalties also now apply to interactive streams and digital downloads. That means iTunes and other digital services such as Spotify, Apple Music, Tidal, Google Play, and Amazon, where listeners can choose the music they want to listen to.
However, not all digital platforms owe mechanical royalties. Non-interactive streaming platforms, where you can select a style of music but not a specific artist, song, or album to play, owe royalties under a blanket music license. Non-interactive streaming services include Pandora, SiriusXM, and Last.FM.
How Many Royalty Collection Services Do I Really Need
Todd: So, sorry to interrupt, but I just wanted to comment that its not an easy thing to do either if youve never done it before. Getting your digital distribution set up is one thing, and its a lot of work. Youve got to register all of your metadata. And then youve got to do it again, for your PRO. And after you do all of that, it seems like so much effort youve put in. Im done. Now I can relax. But unfortunately, you need to set up your publishing with a Publishing Administrator, and do that work again.
So that makes at least three collection services that you need. But since self releasing artists have no label or publishing company collecting for them, they need even more.
Thats a good thing, because it means there are lots of ways to monetize your music. And well discuss those other ones too.Some of these Publishing Administrators will make the process easy for you. Some you really have to just provide them with what Paul was saying all of your song data and metadata. But, yeah, you really do have to do this additional step of getting a Publishing Administrator.
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A Quick History Lesson
Before the digital age, royalties were difficult to track. But there were fewer platforms to consume music, so there were far fewer royalty streams to worry about.
With physical sales plummeting, and people shifting from downloading to streaming and the rise of digital radio , there are suddenly more royalties out there. But they can be tracked much easier through sonic recognition and content ID software.
Were not quite there yet, but were getting closer every day.
For indie artists without a label or a publisher, you have to know what these royalties are and know where and how to get them.
So lets break them down.
How To Buy Royalties To Earn Extra Income
Disclosure: This post may contain affiliate links, meaning I get a commission if you decide to make a purchase or sign up through my links, at no cost to you. Please read my disclaimer for more info.
Did you know that royalties can provide you with a stable stream of passive income? Lets go through this together as we explore ways on how you can buy royalties.
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The Breakdown Of Copyright And Licensing
Here is a brief breakdown of the copyright and licensing uses covered in this guide:
Every song has two copyrights: Composition rights and master rights. Music composition copyrights include the underlying music and any lyrics. Master copyrights include the reproduction and distribution of the master recording.
Theres a difference between licensing and royalties. A master license grants a music user permission to use intellectual property owned by someone else. Whereas royalties are the payments generated from using that intellectual property.
Artists issue exclusive rights to a publishing company for the use of their recordings in exchange for royalties. The music publisher may then release the recording or issue rights to either a record label or mechanical rights agency.
Additionally, artists can assign the master sound recording copyright to a record label. This agreement allows the label to reproduce, distribute, and license that recording in exchange for royalties.
Lastly, all parties involved in the production receive a percentage of royalty payments. The royalty amounts are often negotiated upfront and then defined in a legally binding agreement.
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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Benefits Of Royalties To Investors
Here are a number of the advantages of investing in royalties for income.
- Uncorrelated Some Royalty payments, such as music royalties, are independent of public markets. This means that they perform independently and are not affected by public market dynamics.
- Yield when it comes to profits, royalties generate better revenues than bonds or dividend-paying stocks. Its a great way to diversify your various types of income streams.
- Consistency with royalties, you are almost certain of earning. This is because they have shown a high level of consistency in terms of earning and payments. This is a desire for any investor to receive consistent payments for their investments.
Why Choose Bmi Publishing
To be clear: BMI is not a publisher. BMI is a performing rights organization . You can register your vanity publishing company with BMI so you have a publisher, so to speak. You can register for BMI for free, whereas ASCAP charges a fee of $50. I spoke about the similarities and differences for ASCAP, BMI, and SESAC earlier in this article.
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Get Royalties For Your Music
Unless you have basic knowledge on who pays royalties for music and how each type is collected, getting royalties for music can be tough going.
But dont worry, here comes an easy explanation!
If you are thinking about streaming music, it could be a little tricky trying to calculate your prospective music royalties by yourself. This is due to the multitude of factors involved. Such as music publishing royalty rates.
Performance rates are negotiated each year between Performance Rights Organizations and the music service providers. While Mechanical Rates, unless otherwise negotiated, are determined by statute.
Given this, a music streaming royalties calculator is definitively the best choice. You can try this out with our very own Royalty Calculator! Just insert an estimated number of streams and, in less than a second, you will have an idea of your streaming income!
After the calculations, youll need to know how to collect the royalties.
Fortunately, there are a lot of music royalty companies that can do it for you. You just need to understand which companies are right for you!