What are Music Royalties?

"But I'm an artist!" you exclaim. "What are music royalties, and should I even care?" As a working musician (or patron), it's crucial to understand how royalties work. Essentially, they allow artists to derive multiple sources of income from radio, YouTube, TV broadcast, ringtones, and many other areas. Every piece of commercial music has two main components: the publishing rights and the master recording. Publishing refers to a song's arrangement and lyrics, which comprise the overall composition. Meanwhile, the master is the song's actual recording. Each component can generate income for the artist, label, manager, and publisher involved, and these are all known as royalties.      

So now the question becomes, "What are music royalties, and how do I get paid?" Though the royalty payment system is extremely complex, it can be broken down into a handful of different segments. Below, we've outlined the main royalty sources, and how musicians can collect money from them. 

Recording Royalties

This is the most straightforward royalty type, and it refers to a song's master recording. Any time this recording is downloaded on a web store like iTunes, or streamed with a service like Spotify, the artist earns a piece of the pie. Typically, a distributor collects all of the royalties and gives them to the record label (or directly to the artist, if they're unsigned).   

Mechanical Royalties

Whenever a label sells a CD, LP, or digital song, the artist and label involved collects a royalty from a mechanical collection society. These royalties are much easier to collect if you're signed with a publisher. In simpler terms, if you write a song and release it via an independent or major label, you earn royalty money whenever the song is sold in "physical" form. This might be at a record shop, on iTunes, on a ringtone store, or via a streaming service like Spotify.     

Performance Royalties

Unlike mechanical royalties — which pertain to "physical" sales or streams of a song — performance royalties are earned whenever a song is performed or broadcast. These earnings are collected by a performing rights organization (or PRO), so you'll need to register with PROs in every territory that is broadcasting your music, in order to gain access to these royalties. 

Every time a radio station, nightclub, or any other retail business  plays your song, you stand to earn performance royalties. This also applies to bands playing cover versions of the song, or TV productions (ads, shows, news segments, etc) that license the song and then play it repeatedly.     

YouTube Royalties

Though music fans have downloaded billions and billions of songs from the iTunes Store, it's not actually the most popular place to hear music. That title belongs to YouTube. You can find the most obscure and rare songs on the video platform, along with monster hits like "Gangnam Style", and it can all be accessed with a simple search. 

YouTube generates massive amounts of revenue from ads, and if you upload a music video or MP3 to the platform, you can earn money from placing banners or short video ads in your content. Furthermore, if another user uploads your song in one of their videos, you earn recording royalties on their video as well.  

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