Music Royalties Explained | The Complete Breakdown of Royalties
Understanding how to collect music royalties and make money from music is incredibly important. In order to do this, you will need to wrap your head around UK copyright law and royalty payments.
Singers can collect music royalties for performance, streaming, mechanical royalties and more. You are entitled to these royalties as a composer of lyrics and/or music. If you are a recording artist or musician then you collect different royalties.
So, if you’re looking to take your music seriously and claim royalties, you’ll want to read on to find out everything you need to know about royalties for singers.
What are music royalties and how do they work?
Music royalties are payments that go to artists and songwriters for the use of their intellectual property. The types of music royalties include mechanical, public performance, synchronization, and print music royalties. The music industry relies on these royalties as the main income for musicians.
There are two sides of music copyrights, master rights and publishing rights. Master rights belong to the owner of the original sound recording. The owner could be the artist, record label or recording studio, it all depends on who funded the recording.
Publishing rights belong to the owner of the actual musical composition. This refers to the notes, melodies, lyrics and anything else that goes into the song. The publishing rights will belong to you, the songwriter, unless you have signed your rights to a publisher.
A lot of artists write their own songs and will earn royalties for both the composing and performing side. This is the best situation because you could earn twice as many royalties when your recordings are played or broadcast.
Publishers and record labels can own and manage royalties. They receive royalties before the artist or songwriter. The songwriter or artist’s share of royalties is then allocated, which varies depending on the deal that’s been signed.
Different types of music royalties
It is important to understand the different ways music generates royalties. There are different types of music royalties for songs and recordings and when combined, can result in a lot of money.
#1 Public performance royalties
Public performance royalties will be paid to either the songwriter, publisher or both whenever songs are performed in public. This doesn’t just apply to pub gigs or stadium tours, it literally means in public. This could include radio, in shops, restaurants, cafes, shopping centres, anywhere!
#2 Mechanical royalties
Mechanical royalties are paid to songwriters or publishers. Songs can be licensed for audio products, including CDs, digital recordings, vinyl or even cassettes. These products generate royalties when they are sold. However, these royalties are typically based on sales of goods rather than production. For example, if the CD is never sold, you wouldn’t earn any royalties.
#3 Synchronization royalties
If the audio is accompanied by another form of media then you receive synchronization royalties. You will earn these royalties whenever your track is used in audiovisual media such as TV, film or video games. The producer of this media will require a license in order to use your song.
#4 Digital royalties
Synchronization royalties now also exist digitally and you will be able to claim royalties if your music is being used on a video. YouTube is now a huge and extremely popular platform and YouTubers often use music in the background of their videos. You can earn a lot of money if their video uses your music and receives a lot of views.
#5 Print royalties
Songwriters and composers can make money by printing and selling their music or lyrics. This is typically sheet music but can even apply to merchandise where certain song lyrics are used. If the music has been notated in sheet music and sold in a songbook or downloaded digitally then you can collect royalties.
#6 Neighbouring rights
Neighbouring rights are also known as international performance royalties. A global hit will generate royalties at different rates across the world. This can vary depending on where in the world it’s been played or performed. International royalties can be collected by your local collection society and in the UK, this will be PPL.
#7 Sampling royalties
If another artist wants to use a second or more of your existing sound recording in his song then they sample it and must get your permission as you own the sound recording copyright and you can then charge a fee for it.
How do music royalties work?
Organisations that use music need to have a license. This could be a venue that pays a PRS license or it could be a streaming service that has negotiated deals with labels and publishers. The money made from these licenses then gets allocated to artists and songwriters. Revenue based on ticket sales for an event or streaming can also contribute to the size of royalties.
All of this money through uses and licenses of your songs is going to need collecting. As discussed earlier, there are two different types of royalty incomes, master and publishing royalties. There are often different companies that deal with collecting these different 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 organization 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 (PPL) 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 do you collect royalties for your music?
There are different memberships available at PRS depending on whether you’re a writer or a publisher. For writers, it’s worth joining if you have created an original song or piece of music being broadcast or performed in any format.
Anyone who owns the rights to recorded music in the UK can join PPL. They will receive their royalties when music is broadcast or is being played in public. It’s also worth noting that artists who have performed on recorded music can join PPL as a performer member but not all performer contributions will be eligible for royalties.
Generally, all audible contributions such as playing an instrument or singing will be eligible.
Making money from music royalties
Artists still continue to make most of their cash through touring and concerts. The dedicated music fans crave the opportunity to listen to their favourite artists perform live which is why festival crowds are getting bigger and bigger.
Performing songs in front of a large audience will generate public performance royalties. Those fans could then go home and listen to your music, creating even more royalties. You may find yourself landing sync placements, which can be a massive source of income, by signing to a label or publisher.
Both royalties and licensing are essential components of the music industry. Without them, it would make life a lot more difficult and very challenging for artists and for everyone concerned with the industry.
Who gets paid music royalties?
It is important to know who receives or distributes royalties for the use of copyrighted music in order to understand where you stand in the grand scheme of things!
Songwriters are people who write both the music and lyrics for a song, this is quite likely to be yourself if you are a musician. You can receive mechanical, performance or sync royalties depending on the use of your music.
Publishers are responsible for ensuring the copyright holders receive the correct payment for use of their music. The publisher will obtain mechanical copyright to your music in exchange for you receiving royalties. If you are considering a music publisher in the future, this is what they will do.
#3 Record labels
Record labels are responsible for marketing and distributing musicians’ recordings. They will have the master rights to songs but not the publishing rights. You will receive a percentage of the royalties earnt through the record label’s work.
#4 Performance artists
A performing artist is someone who performs the songwriter’s original work. They will not have publishing rights unless they are also the songwriter. Any other public performances of the songwriter’s original work will generate some royalty income for the original owner.
#5 Mechanical Rights Agency
Agencies can manage the mechanical licensing rights for the publisher of the music. The agency charges a set fee for reproducing or distributing the music. The agency makes money from the fees and gives a share of that back to the publisher.
#6 Sync Licensing Agency
Sync licensing agencies have the rights from record labels or publishers to issue licenses in regards to syncing music to audiovisual media. They will tend to take a share of the upfront fee required to licence the song. This shouldn’t affect the royalties you gain from the broadcast of the song.
How long do music royalties last?
Royalties last their entire life of the songwriter and another 70 years after they have passed away. This can result in well over 100 years of royalties. This is why some songwriters have one huge hit song and the royalties they continuously earn can sort them out for life.
How much are music royalties for radio?
The amount of money the radio stations pay per play will change each year according to the individual station’s listenership, which varies year by year.
You also need to ensure that your track has the International Standard Recording Code (ISRC) from the PPL for the tracks you intend to send to radio stations as these allow radio stations to identify you as the owner of the track. Your CD and MP3 tracks need to make sure the IRCS is encoded. Then, register the tracks with the PRS and the PPL. It’s all part of an important step to ensure you don’t miss out on radio royalties.
The BBC radio stations can pay a lot to play your song during primetime:
- Radio 1: £13.63 per minute
- Radio 2: £24.27 per minute
- 6 Music: £5.25 per minute
Spotify & Apple Music royalties
Artists and songwriters are paid by streaming services each time a song is streamed. The two biggest streaming platforms are Spotify or Apple Music and they both have to negotiate agreements with labels and publishers. They then pay royalties based on how much revenue they make over a year.
We can take a look at popular music streaming services such as Spotify to see how much you can earn on average from one avenue of royalties. A song on Spotify on average generates $0.006 and $0.0084 per stream in royalties. This may seem small but with huge hit songs it can really add up. A “current global star” according to Spotify generated more than $3 million in royalties just from Spotify streams.
Why are music royalties important?
It sounds like such an obvious question, but when you are starting out in the music industry, artist royalties can be a great way for you to bring in a bit of extra money. It might not sound like a lot at first, but if your track goes on to sell millions of copies then it becomes a much bigger earner. You can even earn a bit of extra money from something you produced a long time ago.
What else would you like to know about music royalties? Let us know in the comments below.