Music Royalties Explained

Music royalties are payments earned whenever your music is played, reproduced, or used commercially. There are six distinct types, each generated by a different use of your music and collected by a different entity. Most artists only collect one or two of these, which means they are earning a fraction of what they are owed for the exact same number of plays.

Understanding royalties is not about mastering music law. It is about making sure the money your music already generates actually reaches you. The difference between collecting one royalty type and collecting all six can double your income from the same catalog with no additional marketing, no additional streams, and no additional effort beyond a few free registrations.

This guide explains each type, who collects it, and exactly what you need to do to capture all of it.

Start Here: The Two Copyrights in Every Song

Before the royalty types make sense, you need to understand one foundational concept. Every recorded song creates two separate copyrights.

The composition. This is the song as written: the melody, lyrics, and arrangement. If you wrote the song, you own the composition. This is sometimes called the "publishing" side. If you co-wrote the song, you share ownership with your co-writers based on your agreed split.

The sound recording. This is the specific recorded version of the song. The master file that came out of your session. If you paid for the recording, you own the master. If a label paid, they typically own it.

These two copyrights are legally separate. They can be owned by different people, licensed independently, and generate different royalties through different collection channels.

This is why you might receive a payment from your distributor and a separate payment from your PRO for the same song in the same quarter. They are collecting different royalty types from different copyrights. It is not a duplicate. It is two distinct revenue streams from the same music.

For a deeper look at how copyright works, see Music Copyright Basics.

The 6 Types of Music Royalties

1. Streaming Royalties (From the Sound Recording)

What triggers them. Every time someone streams your song on Spotify, Apple Music, YouTube Music, Amazon Music, Tidal, or any other streaming platform.

Who pays. The streaming platform pays your distributor based on your share of total plays within the platform's royalty pool.

Who collects. Your distributor: DistroKid, TuneCore, CD Baby, AWAL, or whichever service you use to deliver your music to platforms.

What it pays. Approximately $0.003-$0.005 per stream on Spotify. Apple Music pays slightly higher. YouTube Music pays less. The exact rate fluctuates based on the listener's country, their subscription tier (paid vs. free), and the platform's total revenue for that period. These are not fixed rates. They are calculated from a pool.

What you need to do. Have a distributor. Upload your music. This is the one royalty type most artists already collect because it is built into the distribution process.

2. Performance Royalties (From the Composition)

What triggers them. Every time your composition is performed publicly. The definition of "publicly" is broad. It includes terrestrial radio (AM/FM), satellite radio, internet radio, live performances at venues, streaming plays, music played in restaurants and retail stores, and TV and film broadcasts.

Who pays. Broadcasters, venues, streaming platforms, and businesses pay blanket license fees to Performing Rights Organizations (PROs). The PROs pool that money and distribute it to registered songwriters and publishers.

Who collects. Your PRO. In the US, that means ASCAP, BMI, or SESAC. Internationally, each country has its own: PRS in the UK, SOCAN in Canada, GEMA in Germany, APRA AMCOS in Australia. You register with one US PRO (you cannot register with more than one simultaneously).

What it pays. Performance royalties from streaming are fractions of a cent per play, but they accumulate across your entire catalog, all streaming platforms, and all other public performance sources. A song in regular rotation on a major-market radio station can generate thousands per quarter in PRO payments. Even without radio, your PRO collects from streaming platforms on the composition side, separate from what your distributor collects on the master side.

What you need to do. Register as a songwriter/composer with ASCAP or BMI (registration is free). Then register each of your songs as "works" in your PRO's database. Both steps are required. Registering yourself without registering your songs means the PRO has no way to match incoming royalties to your catalog.

This is the royalty most artists miss. If you have released music and are not registered with a PRO, you have been leaving performance royalties uncollected since your first release. Those royalties do not disappear. They sit in holding until claimed (for a period), then get redistributed to other registered rights holders. Your money goes to someone else.

3. Mechanical Royalties (From the Composition)

What triggers them. Every time your composition is reproduced. "Reproduction" includes streaming plays (yes, every stream generates both a performance royalty and a mechanical royalty), digital downloads, physical copies (CDs, vinyl), and cover versions of your song recorded by other artists.

Who pays. Streaming platforms and digital stores pay mechanical royalties to mechanical rights organizations. Physical manufacturers pay mechanical license fees when pressing your music.

Who collects. In the US, The Mechanical Licensing Collective (The MLC) collects digital mechanical royalties from streaming platforms. This is a relatively new entity, created by the Music Modernization Act in 2018. Before The MLC, digital mechanical royalties were poorly tracked and massively underpaid. Outside the US, local mechanical rights societies handle collection.

What it pays. For physical products and downloads, the US statutory rate is 12.40 cents per song (for songs 5 minutes or under). For streaming, mechanical royalties are calculated through a complex formula based on the platform's total revenue. As a rough benchmark, mechanical royalties from streaming typically add 15-25% on top of what you already receive from your distributor. On a song with 1 million Spotify streams, that could mean an additional $600-$800 that you would never see if you were not registered with The MLC.

What you need to do. Register with The MLC at themlc.com (free, takes about 10 minutes). Register your songs as works. If you skip this, your digital mechanical royalties go into a pool of unmatched money. After a holding period, that money gets distributed to other registered publishers based on market share. It is the same problem as unregistered PRO royalties: your money, someone else's pocket.

4. Sync Licensing Fees

What triggers them. When your music is selected for use in a TV show, film, commercial, video game, trailer, podcast, or online content.

Who pays. The production company, brand, or content creator who wants to use your song. Sync fees are negotiated per placement, not collected through blanket licenses.

Who collects. You, your publisher, your sync agent, or your distributor (depending on your setup). There is no central collection body for sync. Each deal is negotiated individually.

What it pays. The range is wide. A small indie film or YouTube creator might pay $500-$2,000. A TV placement in a streaming series typically pays $5,000-$25,000. A major network show can pay $10,000-$50,000+. A national commercial can pay $50,000-$500,000+ depending on the brand, duration, and media buy. These are one-time placement fees. On top of the sync fee, you earn ongoing performance royalties every time the content airs or streams, collected through your PRO.

What you need to do. Own or control your masters (essential for licensing the recording). Have your songs registered with a PRO (for the backend performance royalties from broadcasts). Optionally, register with sync platforms like Musicbed, Artlist, or Songtradr, or work with a sync agent or publisher who actively pitches your catalog. Make sure your recordings have no uncleared samples, as these make sync licensing impossible. See How to Get Your Music in TV, Film, and Ads for the full sync strategy.

5. Neighboring Rights Royalties (From the Sound Recording)

What triggers them. When your sound recording (not the composition) is played on non-interactive platforms. This includes satellite radio (SiriusXM), internet/digital radio (Pandora, iHeartRadio's non-on-demand streams), terrestrial radio outside the US, TV broadcasts, and public venues (bars, restaurants, gyms).

Note: The US is one of the only developed countries that does not pay performers neighboring rights for terrestrial (AM/FM) radio play. This is a long-standing policy gap. Neighboring rights royalties in the US come from digital and satellite radio only.

Who pays. Broadcasters and digital platforms pay license fees to collective management organizations, which distribute those fees to master owners and performing artists.

Who collects. SoundExchange in the US (for digital and satellite radio). Internationally, neighboring rights organizations handle collection: PPL in the UK, GVL in Germany, SENA in the Netherlands, and equivalents in most major markets.

What it pays. SoundExchange distributes payments as follows: 50% to the master owner (you, if you are independent), 45% to the featured artist, and 5% to a fund for backup performers and session players. If you are an artist who owns your masters and performs on your own recordings, you are entitled to 95% of the total (the 50% owner share plus the 45% artist share). Payments vary based on how much your music is played on SoundExchange-covered platforms. Artists with SiriusXM or Pandora play can see meaningful quarterly checks.

What you need to do. Register with SoundExchange at soundexchange.com (free). Register as both the "sound recording copyright owner" and the "featured artist." Artists who own their masters need to register under both roles to collect their full 95% share. If you only register as one, you leave half your money uncollected.

6. YouTube and User-Generated Content Royalties

What triggers them. When your music appears in YouTube videos: your own uploads, fan-made content, lyric videos, reaction videos, compilations, or any user-generated content that uses your song.

Who pays. YouTube, through its Content ID system and advertising revenue share.

Who collects. Your distributor, if they participate in YouTube Content ID. Most major distributors (DistroKid, TuneCore, CD Baby) include Content ID enrollment as a standard or optional feature. Some artists use a dedicated YouTube rights administrator for more granular control.

What it pays. YouTube pays based on ad revenue generated by videos containing your music. Rates vary by viewer country and ad market, but typical CPMs range from $1-$5 for music content. A fan-made video that goes viral with your song can generate meaningful revenue if Content ID is set up to claim and monetize it. Without Content ID, that revenue goes to nobody or to the video uploader.

What you need to do. Ensure your distributor has enrolled your music in YouTube Content ID. This system automatically identifies videos using your music and either monetizes them (you earn a share of ad revenue) or gives you the option to block them. Verify this is active. Some distributors require you to opt in rather than enrolling by default.

The Collection Checklist

Here is every entity you need to register with to collect all six royalty types, and what each one costs.

Total setup time: Under 1 hour. Total annual cost: $20-$50 (just the distributor fee). Revenue impact: Potentially doubles your per-stream income by capturing royalty streams that were previously going uncollected.

If you have not done all four registrations, stop reading and do them now. Every month you wait is money that either goes unclaimed or gets redistributed to bigger artists. These registrations are the single highest-ROI action any artist can take.

How the Money Flows (Simplified)

Here is what happens when one fan streams your song one time on Spotify:

1. Spotify calculates your share of the royalty pool for that period.

2. Spotify sends the sound recording royalty to your distributor. Your distributor pays you.

3. Spotify sends the mechanical royalty (composition side) to The MLC. The MLC pays you (if registered).

4. Spotify sends the performance royalty (composition side) to your PRO. Your PRO pays you (if registered and songs are registered as works).

That is three separate payments from three separate entities for one stream. If you are only registered with your distributor, you are collecting approximately one-third of the total royalty generated by that play.

The actual math is more complex (pool-based calculations, international variations, varying rates), but the principle holds: one stream, multiple royalty types, multiple collection points.

Splits and Collaborations

When multiple people write a song, the composition royalties are shared among co-writers. These splits need to be agreed upon in writing before the song is released.

The default. If no written split agreement exists, most PROs assume equal splits among all credited writers. Two writers, 50/50. Three writers, 33/33/33. This may not reflect who actually contributed what.

The best practice. Agree on splits the day the song is written. Use a simple split sheet: a one-page document listing each writer's name, PRO affiliation, IPI number, and ownership percentage. Both parties sign. Takes 5 minutes. Prevents months of frozen royalties and damaged relationships.

Where it gets complicated. Producer credits. If your producer contributed to the melody or arrangement, they may have a legitimate claim to a composition split, separate from their production fee. This should be discussed before the session, not after the song blows up. "I did not think the beat counted as songwriting" is a dispute that has frozen royalties on thousands of releases.

For detailed guidance on collaboration agreements, see Music Copyright Basics.

Common Mistakes

Not registering with a PRO. The most common and most costly mistake. Free to fix. Takes 15 minutes. There is no reason any artist with released music should not be registered.

Not registering with The MLC. Same problem, newer entity. Many artists who registered with their PRO years ago have never heard of The MLC. It launched in 2021. If you have not registered, your digital mechanical royalties from streaming are going unclaimed.

Registering yourself but not your songs. Signing up for ASCAP does not automatically register your catalog. You need to add each song as a "work" with its metadata (title, writers, splits, ISRC). Without this step, your PRO cannot match royalty payments to your songs.

Assuming your distributor handles everything. Your distributor collects streaming royalties from the master side. That is one of six royalty types. Performance royalties, mechanical royalties, neighboring rights, and sync backend royalties all require separate registrations and separate collection entities. Your distributor is one piece of the puzzle.

No written split agreements. Co-writing without a split sheet is gambling with your income. When a song generates real money, unclear splits create disputes that can freeze all royalties for everyone involved until resolved. The 5 minutes it takes to fill out a split sheet can save you months of lost income.

Not registering with SoundExchange as both owner and artist. Artists who own their masters are both the sound recording owner and the featured artist. SoundExchange has separate registration for each role. If you only register as one, you collect roughly half of what you are owed.

Frequently Asked Questions

How long until I start receiving royalty payments?

Streaming royalties from your distributor typically arrive 2-3 months after plays. PRO performance royalties are paid quarterly, with a 6-9 month delay from when plays occur. The MLC mechanical royalties are paid on a similar quarterly schedule. SoundExchange pays quarterly. Expect a 3-9 month lag between plays and payment across all channels. This delay is normal and permanent. Plan your finances around it.

Do I need a publisher?

Not necessarily. If you are not signed to a publishing deal, you are your own publisher by default. You can collect composition royalties directly through your PRO and The MLC. A publisher becomes valuable when you want someone actively pitching your songs for sync placements, managing complex international collection, or administering a large catalog. For most early-career artists, self-publishing through direct registration is sufficient and free. See Music Publishing: How It Works and When You Need a Publisher for the full breakdown of deal types and when a publisher makes sense.

What happens to royalties I never collect?

They sit in holding accounts for a period that varies by organization. After that period, unclaimed royalties are distributed to other registered rights holders based on their market share. In practical terms, your uncollected money gets divided among bigger artists and publishers who are registered. The system rewards people who show up.

Do cover songs generate royalties for the original songwriter?

Yes. If another artist records your song, they owe you mechanical royalties for every reproduction (stream, download, physical copy). They need to obtain a mechanical license, typically through the Harry Fox Agency or a service like Easy Song Licensing. You earn the composition royalties. They own their specific recording.

How do international royalties work?

PROs have reciprocal agreements with their international counterparts. If your song is played on UK radio, PRS in the UK collects the royalty and routes it to your US PRO, which pays you. The process works, but it is slow. International royalties can take 12-18 months to arrive. For neighboring rights, you may need to register directly with international organizations or use a collection administration service (Songtrust, CD Baby Pro) to manage international registrations on your behalf.

Can I switch PROs?

Yes, but the process takes time. You need to resign from your current PRO and register with the new one. There is typically a waiting period (up to a year in some cases) to avoid double-claiming. Before switching, compare the payment schedules, tools, and administration of each PRO. The royalty rates themselves are largely the same, since they are based on the same blanket license pools.

Read Next:

• Music Copyright Basics

• How Music Artists Actually Make Money

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