What Is a Letter of Direction in Music?
For Artists
A letter of direction (LOD) is a written instruction from a rights holder to a distributor, publisher, label, or collecting society telling them to pay a portion of that rights holder's earnings to a specified third party. It is how producers, co-writers, and other collaborators get paid directly from the source instead of waiting for the primary rights holder to forward their share.
If you have ever co-written a song or produced a track for another artist, you have probably been promised a percentage of something. Maybe 50% of the publishing. Maybe 3 points on the master. The question nobody asks until the money arrives: how does that percentage actually reach your bank account?
That is what a letter of direction solves. It is not a contract (though it usually references one). It is a routing instruction. "Pay this person this percentage of this income from this song." Simple concept, but skipping it is one of the most common reasons collaborators never see money they are owed.
For the full picture of how music business paperwork works, see Music Business Essentials for Artists.
How a Letter of Direction Works
Here is the typical scenario. You co-write a song with another artist. You agree to a 50/50 split. You both sign a split sheet documenting the ownership. The song gets released through the other artist's distributor.
Without an LOD, the distributor pays 100% of the master royalties to the artist's account. The artist is then responsible for forwarding your share. If the artist is organized and honest, this works. If they are disorganized, broke, or avoiding you, your money sits in their account indefinitely.
With an LOD, you send a letter to the distributor (signed by the primary artist who authorizes it) instructing them to pay your percentage directly to you. The distributor splits the payment at the source. Your money never touches the other party's account.
The same logic applies to publishing. If you co-own a song's composition with another writer, a letter of direction to the publisher or publishing administrator instructs them to pay your share directly. For a detailed breakdown of the different royalty types involved, see Music Royalties Explained.
When You Need a Letter of Direction
Situation | LOD Needed? | Who Sends It |
|---|---|---|
Co-written song released through the other writer's distributor | Yes | The primary artist/account holder authorizes the LOD to their distributor |
Producer with points on a master | Yes | The artist or label authorizes the LOD to their distributor or label |
Songwriter getting paid through another writer's publisher | Yes | The primary writer authorizes the LOD to their publisher |
You release your own song and own 100% | No | No split needed |
Co-writers who each have their own distributors and publishers | Depends | Each writer's share may already flow through their own accounts |
The key principle: an LOD is needed whenever your money flows through someone else's account and you want it redirected to yours at the source.
What a Letter of Direction Contains
An LOD is a short document. It does not need to be complex, but it does need to be specific. The standard elements:
Header: "Letter of Direction" with the date.
From: The person authorizing the payment redirect (the primary account holder with the distributor, label, or publisher).
To: The entity being instructed (the distributor, label, or publisher).
Song identification: Song title, ISRC code (for master royalties), and/or ISWC code (for publishing royalties). Be specific. "All songs" is not sufficient. List each track individually.
Payment instruction: The exact percentage to be paid, the recipient's name, and their payment details (bank info, PayPal, or however the entity processes payments).
Reference to underlying agreement: A mention of the split sheet, producer agreement, or contract that establishes the recipient's entitlement. Example: "Per the producer agreement dated [date], [Producer Name] is entitled to 3% of net master royalty income from the above tracks."
Signatures: The authorizing party must sign. Some entities also require the recipient's signature.
Some distributors have their own forms or online systems for splitting payments. DistroKid has a splits feature. TuneCore allows collaborator payments. If your distributor has a built-in system, use it. If not, a standalone LOD addressed to the distributor achieves the same result.
The Relationship Between LODs and Split Sheets
A split sheet documents ownership. An LOD routes payments. They are different documents that work together.
The split sheet says: "Producer X owns 20% of the master for Song Y." The LOD says: "Distributor, please pay 20% of master royalties for Song Y directly to Producer X at this account." Without a split sheet (or producer agreement) establishing the ownership, the LOD has no basis. Without the LOD, the ownership exists on paper but the payments may not reach the right person.
Do both. Always. The split sheet should be signed before or during the session. The LOD should be filed with the distributor, label, or publisher before the song is released. For detailed guidance on split sheets, see Split Sheets. For producer-specific deal terms, see Producer Agreement Essentials.
Common Mistakes
Not filing the LOD before release. Once royalties start flowing to the wrong account, getting them redirected retroactively is harder. File the LOD before the release date.
Being vague about which songs. "All future songs" is not enforceable in most contexts. List specific song titles and identification codes. Update the LOD when new songs are added to the agreement.
Relying on verbal promises. "I'll send you your cut when it comes in" is not a payment system. It is a hope. An LOD filed with the paying entity removes the dependence on someone else's follow-through.
Not confirming receipt. Send the LOD and confirm that the distributor, label, or publisher has received it, understands it, and will act on it. A letter sitting in an unread inbox does nothing.
Artists and producers who handle their business properly from the start of their career avoid the payment disputes that damage relationships and cost money later.
Frequently Asked Questions
Is a letter of direction legally binding?
An LOD is an instruction authorized by the account holder, not a standalone contract. Its enforceability depends on the underlying agreement (split sheet, producer agreement) that establishes the recipient's right to payment. The LOD is the mechanism, not the entitlement.
Can I send a letter of direction without the other party's consent?
No. The LOD must be authorized by the person whose account is being redirected. You cannot instruct someone else's distributor to pay you without that person's written authorization.
What if my distributor does not accept letters of direction?
Some smaller distributors do not have a process for LODs. In that case, use the distributor's built-in split or collaborator payment feature if one exists. If neither option is available, you are dependent on the primary account holder forwarding your share manually.
Read Next:
Keep Your Business Organized:
Orphiq helps you track releases, collaborators, and the paperwork that keeps money flowing to the right people.